Petition for Writ of Certiorari — Pan American World Airways, Inc. v. Causey

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OCTOBER TERM, 1989

PAN AMERICAN WORLD AIRWAYS, INC.,

Petitioner,

Vv.

JOHN P. CAUSEY, JR., Individually and as Executor of

the Estate of JOHN P. CAUSEY, SR., and as Administra-

tor with Will Annexed of the Estate of VIRGINIA D.

CAUSEY, et al., Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

RICHARD M. SHARP *

FREDERICK C. SCHAFRICK

SHEA & GARDNER

1800 Massachusetts Ave., N.W.

Washington, D.C. 20036

(202) 828-2000

CLINTON H. CODDINGTON

RICHARD G. GROTCH

CODDINGTON, HICKS

& DANFORTH

8000 Sand Hill Road

Building I, Suite 185

Menlo Park, CA 94025

(415) 854-8600

Attorneys for Petitioner

Pan American

World Airways, Inc.

July 28, 1989 * Counsel of Record

WILSON - Epes PrintING Co., Inc. - 789-0096 - WASHINGTON, D.C. 20001

IS | OAd~

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QUESTIONS PRESENTED *

1. Do the Federal Rules of Evidence bar admission of

a defendant’s subsequent remedial measures when those

remedial measures were or might have been required by

a government regulatory agency?

2. In a case being tried to a jury by special verdict

under Federal Rule of Civil Procedure 49(a), does the

District Court err if it informs the jury of the legal

effect of its answers to the special verdict interrogatories

when such an instruction is not necessary to enable the

jury to make its findings?

*In addition to the respondents listed on the capition, other

parties in the Court of Appeals wer2 Simon Ryder, individually and

as heir of John Wilson Ryder deceased, and Margaret G. Johns,

as guardian ad litem for John Treloar Ryder, Sarah Jane Ryder,

and Simon Bruce Ryder, minors.

In compliance with Supreme Court Rule 28.1, petitioner states

that it is a wholly owned subsidiary of Pan Am Corporation and

thai it has the following subsidiaries or affiliates which are not

wholly owned by it or by Pan Am Corporation: Aeronautical

Radio, Inc., Air Cargo, Inc., Airline Tariff Publishing Company,

Escola Americana de Rio de Janeiro, Honolulu Fueling Facilities

Corporaticn, International Aeradio (Caribbean) Lid., Liberian De-

velopment Corporation, Manhattan Air Terminal, Inc., Nigerian

Aviation Handling Co., Promotora de Hoteles de Turismo Medellin,

S.A., Social Immobiliaria Norteamericana, S.A., and Societe In-

ternational de Telecommunications Aeronautiques.

(i)

TABLE OF CONTENTS

QUESTIONS PRESENTED ......... saapannansinnans , i

TABLE OF AUTHORITIES .................

RULES, TREATIES, AGREEMENTS, AND REGU- :

ge. SS a

STATEMENT OF THE CASE ........W00.0....

1. Initial Proceedings —......0.......0000....- a ae ancl

ee cessssubiboniasioutpaineene

a. Informing the Jury of the Legal Effects of

Its Decision OER OCT Sn ee OREN TaD Sete a 5

b. The Hudson Report and Plaintiffs’ Wilful

NE ETE TE eee

ce. Plaintiffs’ Lack of Notice Claim.....................

8. The Court of Appeals’ Decision .................002........

REASONS FOR GRANTING THE WRIT 10

I. WHETHER THE FEDERAL RULES OF EVI-

DENCE PROTECT REMEDIAL MEASURES

THAT ARE DEVELOPED AND IMPLE-

MENTED BY A DEFENDANT UNDER GOV-

ERNMENTAL SUPERVISION IS AN IMPOR-

TANT QUESTION AS TO WHICH THE

awe wo N

CIRCUITS ARE IN CONFLICT ............ 10

A. The Decision Below Conflicts'with Decisions

ESTE 10

B. Whether the Federal Rules of Evidence Pro-

tect Subsequent Remedial Measures of a

Defendant that Are Required or Recom-

mended by the Government Is a Question of

Recurring Importance .........2...0.......-..eeeeeeeeeeee 15

(iii)

TABLE OF CONTENTS—Continued

Page

II. THE DECISION BELOW CONFLICTS WITH

OTHER DECISIONS ON SPECIAL VER-

DICTS AND PRESENTS AN IMPORTANT

QUESTION OF JUDICIAL ADMINISTRA-

TION, PARTICULARLY WITH RESPECT TO

CASES ARISING UNDER THE WARSAW

IRI LONE ELLE LETTER 18

CEI icicsccchasisctesiec'aunsissnsncchc ete saniehitipiiagilineliiedeis babeannaiieliticin 21

APPENDIX:

Opinion of the Court of Appeals, dated March 27,

MIP caicuctsas sencinncohsatsscaictna ehieradin tenestaicipdineiiitenantataaltis non la

Notice from Clerk’s Office, Court of Appeals for

the Ninth Circuit, regarding entry of judgment

Oi es IO cee wctnctaetlictniaiattincintinte enc 10a

Opinion of the Court of Appeals, dated August 24,

TE ncestinivnnicenipittiiniliceaiiaatita iia a hires lla

Order of the Court of Appeals Denying Petition

for Rehearing, dated June 21, 1989 ...........0......... 38a

Opinion of the District Court, dated October 27,

EPCS FESO MC TOL DT Te OE Ran Mew nen EERO 39a

Special Verdict Form Used in District Court .......... 62a

Judgment of the District Court, filed July 24,

SIE snthccwentinntmanitessiediindilataiaanien i or Sen 65a

Excerpts from the Sinden ES ae 67a

Excerpts from Trial Transcript. May 12, 1986......... 84a

Excerpts from Trial Transcript, May 13, 1986 ........ 95a

Excerpts from Triai Transcript, May 21, 1986......... 10la

Federal Rules of Evidence 401, 403 and 407 _............ 106a

Federal Rule of Civil Procedure 49 (a) _...........0....... 107a

Warsaw Convention, Articles 22 and 25................ .. 108a

Montreal Agreement of 1966 (—ooonoeeeeeeeeeeenennnnenee es 110a

Former Civil Aeronautics Board (now Depart-

ment of Transportation) Regulations, 14 C.F.R.

Se SRE MI ITD sictekscsnitcsadesinsastotipsneninniasibasiaatiltacaiahaelbsioaudatin .. 118a

TABLE OF AUTHORITIES

CASES: Page

Bauman v. Volkswagenwerk Aktiengesellschaft,

621 F.2d 280 (6th Cir. 1980) ................00..00000.... 13

Benitez-Allende v. Alcan Alumino do Brasil, S.A.,

857 F.2d 26 (ist Cir.), cert. denied, 109 S.Ct.

1185 (1988) ................ 11

Cate v. Good Brothers, Inc., 181 F.2d 146 (8d

Cir.), cert. denied, 340 U.S. 826 (1950) ............... 20

Chan v. Korean Air Lines, Ltd., 109 S.Ct. 1676

(1989) . = 8, 9, 19

Chase Vv. General Motors Corp., 856 F.2d 17 (4th

OE REE GS ae ee Sem 13

Fasanaro Vv. Mooney Aircraft Corp., 687 F. Supp.

FS TT Sn ee a 11

Gullett v. St. Paul Fire & Marine Insurance Co.,

446 F.2d 1100 (7th Cir. 1971) —....020000000002.... 20

Herndon v. Seven Bar Flying Service, Inc., 716

F.2d 1822 (10th Cir. 1983), cert. denied, 465

Ta i 12, 13

in re Airport Disaster at Metropolitan Airport,

Detroit, No. 84-1660 (6th Cir., Dec. 3, 1985)

(available on Westlaw) —.-...-.......2....----....---.------ 13

In re Korean Air Lines Disaster, 664 F. Supp.

1468 (D.D.C. 1985), aff'd, 829 F.2d 1171 (D.C.

Cir. 1987), aff'd sub nom. Chan v. Korean Air

Lines, Ltd., 109 S.Ct. 1676 (1989) 0. 9

Kociemba v. G.D. Seariz & Co., 683 F. Supp. 1579

RRR USE a es oe a 12

Lindsay Vv. Ohio Pharmaceutical Corp., 687 F.2d 87

I A I i lin dalalicn Snvapctlecenianblcebuiheatcsidaiiinion 18, 14

Lolie v. Ohio Brass Co., 502 F.2d 741 (7th Cir.

RINE c ERT” SOE ae CONE TT eee WE ee 12

Lowery V. Clouse, 348 F.2d 252 (8th Cir. 1965)... 20

Machin V. Zuckert, 316 F.2d 336 (D.C. Cir.), cert.

denied, 375 U.S. 896 (1968) 2.000.000... 16, 17

Millard v. Municipal Sewer Authority, 442 F.2d

Uy Se re I ite ects nines 20

Motor Vehicle Manufacturers Association v. State

Farm Mutual Automobile Insurance Co., 463 |

U.S. 29 (1983) -..... 17.

TABLE OF AUTHORITIES—Continued

Page

Perricone v. Kansas City Southern Railway Co.,

704 F.2d 1876 (5th Cir. 1983) 00. 19

Ratigan v. New York Central Railroad Co., 291

F.2d 548 (2d Cir.), cert. denied, 368 U.S. 891

CEP vincectntk duisnticnssttiditintnacrtniatthcinep eas alamictinlaaie 20

Rocky Mountain H elicopter, Ine. V. Bell Helicopter

Textron, Div. of Textron, Inc., 805 F.2d 907

(10th Cir. 1986) il

Rozier v. Ford Motor Co., 573 F.2d 1832 (5th

Cir.), rehearing denied, 578 F.2d 871 (1978)... 12

Skidmore v. Baltimore & O.R. Co., 167 F.2d 54

(2d Cir.), cert. denied, 335 U.S. 816 (1948)....... 18

Thedorf v. Lipsey, 237 F.2d 190 (7th Cir. 1956) .... 20

United States v. Weber Aircraft Corp., 465 U.S.

792 (1984) 16

Villari v. Terminix International, “ Ine., 692 F.

Supp. 568 (E.D. Pa. 1988) 14, 15

Vinieris v. Byzantine Maritime Corp., 731 F.2d

oe, 8s Sk ee eee el aite 19

Vockie v. General Motors Corp., 66 F.R.D. 57

(E.D. Pa.), aff'd mem. 523 F.2d 1052 (8d Cir.

| 14

Walther v. Omaha Public Power District, 412 F. 2d

1164 (8th Cir. 1969) 20

Werner Vv. Upjohn Co., 628 F.2d 848 (4th Cir.

1980), cert. denied, 449 U.S. 1080 (1981) ....... 12, 18, 17

Wolf by Wolf v. Procter & Gamble Co., 555 F.

Sk eee 15

STATUTES:

a ie nsticphndbieindcitsins “Whinieatnnbia 2

Ee 3

| I a a Re 16

Consumer Product Safety Act

yp BR RF eee eae 16

Federal Aviation Act

49 U.S.C. app. §§ 1801 et seq. one 15

Federal Food, Drug, and Cosmetic Act

Oe Rts ee ee Oe OD, iceitinctdiiitinettiwen 16

vii

TABLE OF AUTHORITIES—Continued

Federal Insecticide, Fungicide and Rodenticide Act

fA rN

Occupational Safety and Health Act —

Be as ces cecsneniecsteseneccoeane

National Traffic and Motor Vehicle Safety Act

I I gas vescccccceccnes

Toxic Substances Control Act

RE e

RULES AND REGULATIONS:

a I nas cccctccccscesccssesesen

Civil Aeronautics Board, Docket 26274, 39 Fed.

Reg. 1526 (Jan. 10, 1974)...................... sc aniesiathinaibaataie

I nas cscenssetnsnndeahnenasnnndiiniennnes

a settimnanesnisiiaintitioh

8 nen OR Te

Page

Neen ceeebansel passim

TREATIES AND AGREEMENTS:

“Hague Protocol,” The Protocol To Amend the

Convention for the Unification of Certain Rules

Pertaining to International Carriage by Air,

done at The Hague, Sept. 28, 1955, 478 U.N.T.S.

GRA SF at CAS Oe Re See tO en a

“Montreal Agreement,” Agreement Relating to

Liability Limitations of the Warsaw Convention

and the Hague Protocol, Agreement CAB 18900,

approved by CAB Order E-23680, Docket 17235,

831 Fed. Reg. 7302 (May 18, 1966), note follow-

3, 4

ing & USC. ape. § 1668....................................... passim

“Warsaw Convention,” Convention for the Unifi-

cation of Certain Rules Relating to International

Transportation by Air, Octcber 12, 1929, 49

Stat. 3000, T.S. No. 876 (1934), note following

49 U.S.C. app. § 1502 ..... passim

viii

TABLE OF AUTHORITIES—Continued

OTHER MATERIALS: Page

Advisory Committee Notes to Proposed Federal

Rules of Evidence, 56 F.R.D. 183 (1972) -.......- 17

Annual Report of the Director of the Administra-

tive Office of the United States Courts, at 188

(Table C-2) (1988) 15

IN THE

Supreme Comt of the United States

OCTOBER TERM, 1989

No.

PAN AMERICAN WORLD AIRWAYS, INC.,

Petitioner,

JOHN P. CAUSEY, JR., Individually and as Executor -of

the Estate of JOHN P. CAUSEY, SR., and as Administra-

tor with Will Annexed of the Estate of Vircinia D.

CAUSEY, et al.,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

Petitioner Pan American World Airways, Inc. (“Pan

Am”) respectfully requests that the Court issue a writ

of certiorari to review the judgment of the United States

Court of Appeals for the Ninth Circuit in these cases.

OPINIONS BELOW

The opinion of the court of appeals on appeal from the

second trial in these cases (App. la) is reported at 871

F.2d 812 (1989). The order of the court of appeals

denying Pan Am’s petition for rehearing and suggestion

for rehearing en banc (App. 38a) is unreported. The

relevant evidentiary orders and jury instructions of the

district court in the second trial (App. 89a, 94a, 96a-

100a) are also unreported. The opinion of the court of

appeals on appeal from the first trial in these cases (App.

lla) is reported at 684 F.2d 1301 (1982), and the dis-

trict court’s opinion following the first trial (App. 39a)

is reported at 462 F. Supp. 1114 (1978).

JURISDICTION

The judgment of the court of appeals was entered on

March 27, 1989. App. la, 10a. A timely petition for

rehearing was denied on June 21, 1989. App. 38a. The

jurisdiction of this Court is invoked under 28 U.S.C.

§ 1254(1).

RULES, TREATIES, AGREEMENTS,

AND REGULATIONS INVOLVED

Rules 401, 403, and 407 of the Federal Rules of Evi-

dence (App. 106a) and Rule 49(a) of the Federal Rules

of Civil Procedure (App. 107a) are reproduced in the

Appendix. Also reproduced in the Appendix are the

relevant provisions of the Warsaw Convention,’ a treaty

of the United States (App. 108a); the Montreal Agree-

ment,? a private agreement among various air carriers

that was approved by the Civil Aeronautics Board

(“CAB”) (App. 110a); and certain regulations of the

Department of Transportation, which were initially is-

sued by the CAB, 14 C.F.R. §§ 221.175-.176 (App. 1138a).

1Convention for the Unification of Certain Rules Relating to

International Transportation by Air, Oct. 12, 1929, 49 Stat. 3000,

T.S. No. 876 (1934), note following 49 U.S.C. app. § 1502; here-

inafter cited as ‘Warsaw Convention.”

2 Agreement Relating to Liability Limitations of the Warsaw

Convention and the Hague Protocol, Agreement CAB 18900, which

was approved by CAB Order E-23680, Docket 17235, 31 Fed. Reg.

7302 (May 13, 1966), note following 49 U.S.C. app. eaperid here-

inafter cited as “Montreal Agreement.”

STATEMENT OF THE CASE

1. Initial Proceedings. On April 22, 1974, Pan Am

Flight 812 departed from Hong Kong on a flight to Los

Angeles with scheduled intermediate stops. On its ap-

proach to the airport at the island of Bali, Indonesia,

the aircraft crashed killing all 96 passengers and 11

crew members.

Numerous law suits arising out of the crash were

brought in the federal district courts* and were trans-

ferred to the District Court for the Central District of

California. All but three cases were settled. The un-

settled cases related to the deaths of John and Virginia

Causey, passengers who were residents of Virginia, and

John W. Ryder, a passenger who was an Australian na-

tional. Pan Am was named as a defendant in these cases,

as were certain crew members and manufacturers who

were subsequently dismissed.‘

Because Flight 812 was an international flight, the

plaintiffs’ damages were subject to the limitations in-the

Warsaw Convention, as supplemented by the Montreal

Agreement and the Hague Protocol.® The plaintiffs con-

3’ The courts had diversity of citizenship jurisdiction. 28 U.S.C.

§ 1332.

*The other defendants were Lee B. Zinke, Executrix of the

Estate of Donald B. Zinke (the captain of Flight 812), Bank of

America National Trust and Savings Association and Marianne

D. Schroeder, Executors of the Estate of John E. Schroeder, Jr.

(the first officer of Flight 812), the Boeing Company, Collins

Manufacturing Company, and Rockwell International Company.

These defendants weré dismissed, and they are no longer inter-

ested in this case. See Pre-Trial Conference Order, 1, approved

Nov. 13, 1984, reproduced in the Excerpts of Record (“‘Exc. Rec.”’)

filed in the court of appeals, 3 Exc. Rec. 811, 812.

5 Article 22 of the Warsaw Convention (App. 108a) sets a limit

of 125,000 gold French francs, an amount the Civil Aeronautics

Board at the time of the accident had interpreted as being ap-

proximately $10,000. Civil Aeronautics Board, Docket 26274, 39

tended that the Convention’s limitations on damages did

not apply because (1) California law displaced the Con-

vention and, in any event, (2) Article 25 of the Conven-

tion removed the limitation on damages in cases where

the carrier engaged in wilful misconduct. In a trial held

in 1978, the jury found that the crash was caused by

negligence and not by any wilful misconduct. The jury —

awarded $300,000 in compensatory damages to the

Causeys and $651,500 in compensatory damages to the

Ryders.

The district court declined to reduce the amounts of

those awards to the limits of the Warsaw Convention

and its supplemental agreements. The court held that

California law applied instead. 462 F. Supp. 1114

(1978), App. 39a. On appeal, the Ninth Circuit reversed

and remanded the cases for a new trial on the issue of

wilful misconduct.* 684 F.2d 1301 (1982), App. 11a.

Fed. Reg. 1526 (Jan. 10, 1974). (Before 1974, the limitation had

been understood to be about $8300.) Article 22 further provides,

however, that a carrier may agree to a higher limitation of lia-

bility. In the Montreal Agreement, Pan Am agreed to increase

the limitation to $75,000 per passenger for tickets involving a

point of travel within the United States. App. 110a.

Pan Am contended that the Causey claims were limited to

$75,000 each by the Montreal Agreement and the claims on behalf

of Mr. Ryder, whose ticket was not subject to the Montreal Agree-

ment, should be limited to $20,000 by the Hague Protocol of 1955

(which had been ratified by Australia, but not by the U.S.). The

Protocol To Amend the Convention for the Unification of Certain

Rules Relating to International Carriage by Air, done at The

Hague, Sept. 28, 1955, 478 U.N.T.S. 371.

6The court of appeals held first that the Warsaw Convention

preempted California law. 684 F.2d at 1306-08, App. 16a-21la.

On plaintiffs’ cross-appeal, the court further ruled that the district

court had erroneously excluded certain records of relevance to

plaintiffs’ claim of wilful misconduct. 684 F.2d at 1313-15, App.

81a-37a. It stated that there “need be no new trial on damages.”

684 F.2d at 1815 & n.17, App. 37a.

2. The Second Trial. The second trial was held in

May and June, 1986. Plaintiffs presented two theories

of proof aimed at removing the treaty limitations on

damages: (1) Pan Am was guilty of wilful misconduct,

and (2) Pan Am had failed to provide adequate notice of

the limitations to the decedents.

a. Informing the Jury of the Legal Effects of Its

Decision. Prior to trial, Pan Am contended that the jury

should not be advised that its findings relating to wilful

misconduct and “adequate notice” would determine

whether plaintiffs’ compensatory damages would be capped

in accordance with the Warsaw Convention and re-

lated agreements.’ The District Court overruled this mo-

tion, stating that the jury should be told “why it is here

again for a second trial” and that “it has to be explained,

albeit briefly, about Warsaw and Montreal.”* There-

after, the trial judge informed the panel of jurors before

voir dire about the legal effects of their factual findings,

stating that, if the jury eventually decided against plain-

tiffs, they would be limited to a smaller amount of money

“controlled by something that we call the Warsaw Con-

vention” and that the limitation “is now $75,000.”* The

judge repeated the limitation a few minutes later when

he stated that the purpose of the notice requirement was

to tell the passenger: “[I]f you are killed in this ac-

cident, your survivors may be stuck with a $75,000 ceil-

ing ... .”?° In closing argument, plaintiffs’ counsel

emphasized that the jury’s findings on wilful misconduct.

and adequate notice would determine whether plaintiffs’

damages were capped."

7 Memorandum of Points and Authorities in Support of Motions

in Limine, at 10-11, Oct. 22, 1985, 3 Exc. Rec. 867-68; Tr. May 12,

1986, at 3-10, App. 85a-89a.

® Tr. May 12, 1986, at 7, App. 88a.

® Tr. May 138, 1986, at 13, App. 97a.

10 Jd. at 14, App. 98a.

11 The Ryders’ attorney said: “This is a defendant that will not

take responsibility. His Honor has given me pérmission to tell

b. The Hudson Report and Plaintiffs’ Wilful Miscon-

duct Claim. To support their contention as to wilful

misconduct, plaintiffs contended that the performance rec-

ord of the captain, Donald Zinke, showed that he was an

incompetent who should never have been in command of

Flight 812. According to plaintiffs, Pan Am’s failure to

dismiss Zinke was due to systemic corporate failures con-

cerning pilot training and evaluation. In this connection,

plaintiffs relied on two investigative reports, which in

their view allegedly showed there had been at Pan Am

“long-term malaise involving management inaction in the

face of ongoing pilot . . . infractions and deviations from

the standards of the industry.” ”

- The more damaging of these reports—the “Hudson

report”—had been prepared by a special team of Federal

Aviation Administration (“FAA”) officials assembled to

inspect Pan Am because of the Bali crash and earlier

accidents.'** App. 67a. That investigation commenced five

days after the Bali crash, and the report was issued over

a year later. App. 67a. Pan Am, as the report stated,

gave its “whole-hearted cooperation” (App. 69a) in try-

ing to remedy any deficiencies in its operations. The

report states that the FAA “team believed that through ~

excellent cooperation on the part of PAA [Pan Am] and

its employees, our investigation was a much shorter and

you that the Warsaw limitation on my Australian clients means

they would get $8500. That’s the reason Pan American is fighting

this, not because of honor, which is an undisguised way of trying

to get your sympathy ....” Tr. June 2, 1986, at 13-159. Causey’s

attorney called the limitation a “supernumerary” that the airline

industry had “been able to hang on to... all these years,” stating

that “[y]Jou and I or anybody else, any manufacturer, don’t have

that.” Tr. June 2, 1986, at 13-12.

12 Brief for Plaintiffs-Appellees, at 4, in No. 86-6453, 9th Cir.

13 The other general report regarding Pan Am’s operations was

an internal corporate review, dated April 23, 1974, and referred to

as the “Thomas report.” It is reproduced at 1 Exc. Rec. 237-320.

ee eee

easier task and a general spirit of government and in-

dustry mutually trying to solve 2 problem together was

displayed throughout.” App. 69a.

The Hudson report identified the remedial steps that

Pan Am was already taking and made numerous addi-

tional recommendations for improvement of operations at

Pan Am. The report stated that “PAA has already init-

iated many management, technical, and procedural

changes . . . , and our report to some degree will high-

light areas that PAA is aware of and has or is con-

sidering appropriate corrective action.” App. 67a. In

this connection, the report attached a 29-page document

by Pan Am identifying corrective actions..* That docu-

ment, for example, identified steps being taken to estab-

lish a review board for airmen with proficiency problems

and plans to increase pilot-in-command training.”

The Hudson report concluded that Pan Am had had

“substandard” captains and first officers, including “Cap-

tain D.B. Zenke [sic], who was killed in the B-707 acci-

dent at Bali.” App. 72a-73a. This conclusion rested in

substantial part on the fact that Pan Am had removed a

large number of pilots from service after the Bali crash.

A table in the report showed a dramatic increase in early

retirements at Pan Am in 1974. App. 73a.

Over Pan Am’s objection,’* the district court ruled that

the Hudson report and its attachments were admissible.”

Plaintiffs’ experts repeatedly referred to the report’s con-

14 This part of the Hudson report is reproduced at 1 Exc. Rec.

350-78.

15] Exc. Rec. 362-63.

16 Memorandum of Points and Authorities in Support Motions

in limine, at 17-31, 42-48, Oct. 22, 1985, 3 Exc. Rec. 874-88, 899-

900.

17 Tr. May 12, 1986, at 17, App. 94a. The report was admitted

at the end of trial. Tr. May 30, 1986, at 12-111. Counsel for

Pan Am continued to object to its admission. Jd. at 12-108 to -111.

tents and pointed out the post-crash remedial efforts of

Pan Am as described in the report, emphasizing particu-

larly the increased rate of retirement for allegedly “sub-

standard” pilots.* Plaintiffs’ counsel also emphasized the

Hudson report in closing argument, urging the jury to

look at it and stressing that it had been prepared by “a

neutral panel of experts.” ”

In a special verdict, the jury found that Captain Zinke

and the crew of Flight 812 had not been guilty of wilful

misconduct, but that Pan Am had committed wilful mis-

conduct by entrusting the flight to Zinke with knowledge

of his unfitness or incompetence.”

ce. Plaintiffs’ Lack of Notice Claim. In the second trial,

plaintiffs also contended that the damage limitations of

the Warsaw Convention/Montreal Agreement did not ap-

ply because Pan Am had failed to provide adequate no-

tice of those limitations to the decedents. It was agreed

that the tickets contained the standard notice and were

printed in the specified point of type. See Chan v. Korean

Air Lines, Ltd., 109 S. Ct. 1676, 1678-7$ (1989) (citing

cases). But plaintiffs contended that the standard ticket

notice was nonetheless inadequate to inform passengers

of the limitations of the Warsaw Convention.”* In addi-

tion, they contended that the travel agencies that had

sold Pan Am tickets to the decedents had not complied

with a C regulation requiring that signs be posted

informing passengers that damage claims might be lim-

ited by the Warsaw Convention. 14 C.F.R. § 221.175(b).

18 Tesmony of Donald E. Kemp, Tr. May 21, 1986, at 6-99 to

-101; id., at 6-120 to -121, App. 102a-104a; Testimony of Jesse

Russell Cottle, Tr. May 21, 1986, at 6-176 to -177, App. 104a-105a.

19 Tr, June 2, 1986, at 13-73 to -74.

20 App. 62a. The special verdict form reproduced in the Appendix

is a carbon copy produced by plaintiffs’ counsel in the court of

appeals after the original was lost.

21 In effect, plaintiffs were equating the ticket notice requirement

with the requirement in product liability law that a manufacturer

Over objection,” the district judge allowed plaintiffs

to try these claims and instructed the jury on plaintiffs’

legal theories of notice.** The jury in its special verdict

found that Pan Am had delivered tickets to the passen-

gers with adequate warnings, but that there had not been

warning signs on display in all of the locations where the

Pan Am tickets were sold. App. 63a.

3. The Court of Appeals’ Decision. Since the jury

found two bases for defeating the Warsaw limitations on

liability, the district court, on July 24, 1986, entered

judgment awarding plaintiffs the full amount of damages

fixed in the first trial. App. 65a. The Ninth Circuit af-

firmed the judgment in a per curiam opinion.

The court of appeals held that the admission of the

Hudson report did not violate Fed. R. Evid. 407: “[T]he

Hudson report does not qualify as a subsequent remedial

measure [under Rule 407] because it was prepared by the

FAA without the voluntary participation of Pan Am.”

871 F.2d at 816 (footnote omitted), App. 8a. As to Pan

Am’s claim that the district court erred in informing the

jury of the legal effects of its findings, the Ninth Circuit

held that the district judge had not abused his discretion,

in part because the jury had to be informed of the lim-

itations to understand the adequate notice issue. 871

must provide consumers with an adequate warning about a prod-

uct’s potential dangers. They even produced two expert witnesses

to support the claim that the average passenger would not under-

stand the standard ticket notice. Tr. May 14, 1986, at 17-142.

22 Pan Am moved in limine to exclude evidence as to such claims,

Memorandum of Points and Authorities in Support of Motions in

Limine, at 37-42, Oct. 22, 1985, 3 Exc. Rec. 894-99; Tr. May 12,

1986, at 24-26. Pan Am cited in support of its position the dis-

trict court opinion which this Court subsequently upheld in Chan.

In re Korean Air Lines Disaster, 664 F. Supp. 1463 (D.D.C.

1985), aff'd, 829 F.2d 1171 (D.C. Cir. 1987), aff'd sub nom. Chan

v. Korean Air Lines, Ltd., 109 S.Ct. 1676 (1989).

23 Tr. June 3, 1986, at 22-25.

F.2d at 815, App. 4a-6a. While the court thus found

information about the treaty limitations necessary so that

the jury could decide whether Pan Am had given ade-

quate notice, it also held later in the opinion that it need

not decide whether it was error to let the adequate notice

issue go to the jury, since the judgment could be affirmed

on the verdict of wilful misconduct. 871 F.2d at 817,

App. 9a.

Pan Am petitioned for rehearing and suggested rehear-

ing en banc with regards to the court’s rulings that the

Hudson report was admissible and that the jury could

properly have been informed as to the legal effects of its

findings. That petition was denied on June 21, 1989,

App. 38a.

REASONS FOR GRANTING THE WRIT

I. WHETHER THE FEDERAL RULES OF EVIDENCE

PROTECT REMEDIAL MEASURES THAT ARE DE-

VELOPED AND IMPLEMENTED BY A DEFEND-

ANT UNDER GOVERNMENTAL SUPERVISION IS

AN IMPORTANT QUESTION AS TO WHICH THE

CIRCUITS ARE IN CONFLICT.

A. The Decision Below Conflicts with Decisions in

Four Circuits.

The court of appeals held that where a private defend-

ant is legally obligated to cooperate with a governmental

agency in developing and implementing remedial meas-

ures after an accident or injury has occurred, those sub-

sequent remedial measures are admissible as evidence not-

withstanding Rule 407 of the Federal Rules of Evidence.

The court reasoned: “The purpose of Rule 497 is not im-

plicated in cases involving subsequent measures in which

the defendant did not voluntarily participate. Where the

defendant has not voluntarily participated in the subse-

quent measure at issue, the admission of that measure

into evidence does not ‘punish’ the defendant for his ef-

forts to remedy his safety problems.” 871 F.2d at 817,

App. 8a. The court then ruled that, although Pan Am

was to be commended for its cooperation in the Hudson

investigation, it was “legally obligated to cooperate,” and

“Tt])hus, the admission of the Hudson report did not pen-

alize Pan Am for its voluntary participation in safety~

measures.” Id.

In this case, the Hudson report recommended correc-

tive measures at Pan Am on such items as pilot training ,

and removal and supported its recommendations by citing /

the measures that Pan Am itself had already undertaken,

including increasing significantly the early retirement of

allegedly “substandard” pilots in 1974. Plaintiffs used

the evidence of those remediai measures at trial to estab-

lish wilful misconduct. The court of appeals nonetheless

found that none of those measures by Pan Am were vol-

untary, despite its cooperation, apparently because the

measures could have been required in any event by the

FAA. Whether a defendant’s subsequent remedial meas-

ures that a government agency could or did require are

admissible to prove the defendant’s culpability is a ques-

tion that divides the circuits.

24The court of appeals was correct in saying that it did not

need to address the issue of whether post-accident studies by them-

selves are covered by Rule 407. 871 F.2d at 816 n.2, App. 8a. The

cases that the court cited have ruled that post-accident testing

and studies as such are not remedial measures covered by Rule 407. /

Rocky Mountain Helicopter, Inc. v. Bell Helicopter Textron, 805

F.2d 907, 918 (10th Cir. 1986); Fasanaro v. Mooney Aircraft

Corp., 687 F. Supp. 482, 486-87 (N.D. Cal. 1988). Accord, Benitez-

Allende v. Alcan Alvmino do Brasil, S.A., 857 F.2d 26, 33 (1st

Cir.), cert. denied, 109 S.Ct. 1185 (1988). But in each case, the

court excluded from evidence the subsequent remedial measures

actually undertaken by the defendant, such as redesign of the

aircraft (Rocky Mountain and Fasanaro) or recall of the product

(Benitez-Allende). In this case the Hudson report described the

remedial measures actually undertaken or being undertaken by

Pan Am. Consequently, even the cases that allow admission of

post-accident testing reports could not support the admissibility

of the Hudson report in its entirety.

On one hand, decisions from the Tenth, Fifth, and

Seventh Circuits support the ruling below that a defend-

ant’s subsequent remedial measures_must be in all re-

spects voluntary if they are to be excluded from evidence.

In Herndon v. Seven Bar Flying Service, inc., 716 F.2d

1322 (10th Cir. 1983), cert. denied, 466 U.S. 958 (1984),

the Tenth Circuit found that a post-crash FAA Airworth-

iness Directive (which prescribed additional precautions

in ae the affected aircraft) was admissible, Rule

407 notwithstanding, because “[w]here a superior author-

ity requires a tort feasor to make post-accident repairs,

the policy of encouraging voluntary repairs which under-

lies Rule 407 has no force—a tort feasor cannot be dis-

couraged from voluntarily making repairs if he must

make them in any case.” 716 F.2d at 1331 (emphasis in

original). Similar interpretations of Rule 407 can be

found in Rozier v. Ford Motor Co., 573 F.2d 1832, 1343

(5th Cir.) (dictum), rehearing denied, 578 F.2d 871

(1978), and in Lolie v. Ohio Brass Co., 502 F.2d 741

(7th Cir. 1974) (Rule 407, before its adoption, cited as

persuasive authority). Accord, Kociemba v. G.D. Searle

& Co., 683 F. Supp. 1579 (D. Minn. 1988).

On the other hand, the Fourth, Sixth, and Second Cir-

cuits, and district court decisions in the Third Circuit

reject the voluntariness standard. In Werner v. Upjohn

Co., 628 F.2d 848 (4th Cir. 1980), cert. denied, 449 U.S.

1080 (1981), the Fourth Circuit held that Rule 407 bars

evidence of a subsequent change in warning labels even

though the change had been required by the Food and

Drug Administration (“FDA”). The court pointed out

that, in addition to its power to coerce, the FDA “also

relies on voluntary compliance and compromise in deter-

mining the content of warnings and advertising for pre-

scription drugs.” 628 F.2d at 859. The Fourth Circuit

reasoned that Rule 407 should apply because that Rule

and the FDA regulations are intended to encourage vol-

untary compliance.** Moreover, that court went on to ex-

) clude government-required remedial measures in Chase

v. General Motors Corp., 856 F.2d 17 (4th Cir. 1988),

where it held that evidence of the post-accident recall of

a car model was inadmissible under Rule 407, even though

it “was not any voluntary act on the part of GM... .”

856 F.2d at 21.

The Sixth Circuit reached an identical result to Chase

in Bauman vy. Volkswagenwerk A.G., 621 F.2d 230 (6th

Cir. 1980), where it held that the trial court had com-

mitted “basic error when it allowed plaintiffs to prove

subsequent changes by the manufacturer in the design of

the [car’s] door latch.” 621 F.2d at 232. This post-

; accident design change was inadmissible, even though

| “Volkswagen ... claimed it [had] subsequently changed

| the design in order te comply with new government reg-

ulations.” 621 F.2d at 233. Similarly, in an unpublished

decision, the Sixth Circuit upheld the exclusion under Rule

407 of a post-accident Airworthiness Directive issued by

) the FAA. In re Airport Disaster at Metropolitan Air-

| port, Detroit, No. 84-1660 (6th Cir., Dee. 3, 1985) (avail-

able on Westlaw). The Sixth Circuit declined to follow

the Tenth Circuit’s decision in Herndon, supra, because it

found the Fourth Circuit’s decision in Werner to be more

persuasive.

A somewhat different approach was taken by the Sec-

ond Circuit in Lindsay v. Ortho Pharmaceutical Corp.,

25 628 F.2d at 859-60: “If subsequent warnings are admitted to

prove antecedent negligence simply because FDA required or

might have required the change, then drug companies may be

discouraged from taking early action on their own and from

participating fully in voluntary compliance procedures. ... The

FDA’s regulations and policies encourage early unilateral action

by the drug companies to improve their warnings, and Rule 407

promotes the same goal. We therefore hold that FDA regulations

in the area of drug labeling do not require a new exception to Rule

407. Indeed, to find such an exception would subvert the policy

goals of both Rule 407 and FDA Regulations... .”

eee

637 F.2d 87 (2d Cir. 1980). There the court reversed a

judgment for the plaintiff and held that the admission of

post-injury changes in the drug’s labeling, which had

been “dictated in large extent by the FDA,” had been

prejudicial error. 637 F.2d at 98. While the court re-

ferred to Rule 407, its decision was based on the view

that under Fed. R. Evid. 403, the probative value of such

subsequent label changes had been outweighed by the dan-

ger of unfair prejudice and confusion. 637 F.2d at 93-

94,—

Finally, the courts in the Third Circuit have likewise

refused to admit subsequent remedial measures when re-

quired or recommended by the government, although the

rationales have been varied. The court in Vockie v. Gen-

eral Motors Corp., 66 F.R.D. 57 (E.D. Pa.), aff'd mem.,

23 F.2d 1052 (8d Cir. 1975), relied on Rule 403 * in

refusing to admit evidence of a car manufacturer’s post-

accident recall campaign and recall letters to car owners.”

Alternatively, Villari v. Terminix International, Inc., 692

F. Supp. 568, 574-75 (E.D. Pa. 1988), held that Rule 407

rendered inadmissible evidence that the defendant had,

subsequent to plaintiffs’ injuries, ceased to use certain

pesticides, even though the Environmental Protection

Agency at the time had been contemplating prohibiting

their use. The court ruled that, for purposes of applying

Rule 407, the voluntariness of a defendant’s subsequent

remedial efforts should be presumed “absent a clear show-

26 The case was tried before the Rules of Evidence took effect,

but the court relied on them as persuasive guides. 66 F.R.D. at

60 n.2.

27 The court in Vockie reasoned: “If such statements are ad-

missible on a wholesale basis, manufacturers will be reluctant to

come forth and make a full unqualified disclosure of any potential

safety hazards which they discover. Manufacturers should not be

inhibited, or prejudiced by, a good faith effort to protect the

public safety and comply with their statutory duty.” 66 F.R.D. at

61 (footnote omitted).

iii

ing of coercion.” ** 692 F. Supp. at 574. Accord, Wolf by

Wolf v. Procter & Gamble Co., 555 F. Supp. 613 (D.N.J.

1982) (Rule 407 bars evidence of subsequent withdrawal

of product from market when evidence shows that with-

drawal voluntary, even though FDA had been contem-

plating requiring such action).

In short, the lower courts have reached conflicting re-

sults and employed a variety of conflicting rationales in

determining whether evidence of subsequent remedial

measures is admissible when the defendant developed or

implemented those remedial measures under government

supervision or compulsion.

B. Whether the Federal Rules of Evidence Protect

Subsequent Remedial Measures that Are Required

or Recommended by the Government Is a Question

of Recurring Importance.

The admissibility of subsequent remedial measures that

are required by or urged by government regulators is a

recurring issue, especially in personal injury litigation

involving air crashes, automobile design defects, prescrip-

tion drugs, and pesticides. In each of those areas, pri-

vate companies are regulated by comprehensive federal

regulatory schemes.” The issue will likely arise repeat-

28The Villari court stated: “While it is true that the rule is

hardly served by excluding evidence of a party acting under com-

pulsion, it is also true that some remedial efforts would be

dcterred if a party was penalized for acting prior to such com-

pulsion. Thus, the voluntariness of a remedial effort should be

presumed absent a clear showing of coercion.” 692 F. Supp. at

574.

2° There is no way to tell how many cases may involve the issue

presented here, but of the 239,634 civil cases commenced in the

U.S. district courts for the 12 months ending June 1588, 41,148

(17%) involved personal injury claims. Thirty-nine recent of the

personal injury cases (16,166) involved product liability claims.

Annual Report of the Director of the Administrative Office of the

United States Courts, at 180 (Table C-2) (1988).

380 See Federal Aviation Act, 49 U.S.C. app. §§ 1301 et seq.;

National Traffic and Motor Vehicle Safety Act, 15 U.S.C. §§ 1581

edly as to those companies and will likely arise as well

with respect to companies regulated under different stat-

utes.*?

The issue has special importance to regulated compa-

nies, the relevant government agencies, and to the -public

health and safety. In aviation, it has long been recog-

nized that public safety is best served if potential de-

fendants are able to participate freely in accident investi-

gations without being concerned that what is said might

be used against them in later litigation. Thus, Congress

has provided that the accident reports of the National

Transportation Safety Board shall not be admissible in

suits for damages. 49 U.S.C. app. § 1441(e). Confiden-

tial statements made ito officials investigating military air

crashes are likewise privileged and protected from dis-

covery. United States v. Weber Aircraft Corp., 465 U.S.

792 (1984) ; Machin v. Zuckert, 316 F.2d 336 (D.C. Cir.),

cert. denied, 375 U.S. 896 (1963). Congress and the

courts have determined that assurances that statements

given to investigators wi!l not be used in future litigation

are necessary to advance the public interest in air safety.

As the Inspector General of the Air Force stated in

Machin, “{I]f investigators were unable to give such as-

surances, testimony in many instances would be less than

fully factual and the determination of the exact causative

factors would be jeopardized, thus seriously hindering

the accomplishment of prompt corrective action designed

to preclude recurrences of similar accidents.” 316 F.2d

at 339.

et seq.; Federal Food, Drug, and Cosmetic Act, 21 U.S.C. §§ 301

et seq.; Federal Insecticide, Fungicide, and Rodenticide Act, 7

U.S.C. §§ 136 et seq.

31 F.g., Consumer Products Safety Act, 15 U.S.C. §§ 2051 et seq.;

Toxic Substances Control Act, 15 U.S.C. §§ 2601 et seq.; Occupa-

tional Safety and Health Act, 29 U.S.C. §§ 651 et seq. For instance,

the issue might arise in asbestos litigation with respect to the

admissibility of revised warning labels required under the Oc-

cupational Safety and Health Act. See 29 C.F.R. § 1910.1001(j).

ee an eee

PAIL Rn

While Machin and similar cases deal with statements

to accident investigators, the same policy applies to post-

accident remedial measures designed to prevent similar

accidents from recurring. Indeed, the Advisory Commit-

tee’s Note accompanying the proposed Rule 407 stated

that the “more impressive[] ground for exclusion [of

subsequent remedial] nieasures] rests on a social policy

of encouraging people to take, or at least not discourag-

ing them from taking, steps in furtherance of added

safety.” 56 F.R.D. 183, 226 (1972). As the Fourth Cir-

cuit in Werner (628 F.2d at 859) and other courts have

recognized, that policy is not limited to protecting the

unilateral conduct of an unregulated company; the policy

of Rule 407 applies with the same force to a company

which is cooperating with a public agency to determine

what subsequent remedial measures should be taken to

protect the public health and safety in light of an acci-

dent.

The court below, to be sure, suggested that there is no

need for Rule 407 when an agency has the power to re-

quire a defendant to develop or implement remedial

measures necessary to protect the public safety. But that

view is fundamentally misguided. Safety agencies would

be hindered and their work delayed, if, in place of whole-

hearted cooperation, -affected companies responded to

safety investigations and recommendations with great

caution and in some instances with resistance.** The in-

terpretation of Rule 407 espoused by the court of appeals

discourages companies from taking “steps in furtherance

of added safety,” contrary to the Rule’s purpose. This

Court should grant review to correct that interpretation.

32 As this Court has noted, regulated companies sometimes re-

sist adoption of proposed safety measures by “wag[ing] the regu-

latory equivalent of war... .” Motor Vehicle Manufacturers

Association Vv. State Farm Mutual Automobile Insurance Co., 463

U.S. 29, 49 (1983).

II. THE DECISION BELOW CONFLICTS WITH OTHER

DECISIONS ON SPECIAL VERDICTS AND PRE-

SENTS AN IMPORTANT QUESTION OF JUDICIAL

ADMINISTRATION, PARTICULARLY WITH RE-

SPECT TO CASES ARISING UNDER THE WAR-

SAW CONVENTION.

Rule 49(a) of the Federal Rules of Civil Procedure

authorizes the use of special verdicts so that the jury can

decide discrete issues of fact and the judge may sepa-

rately apply the law to the facts found by the jury.

Many years ago Judge Jerome Frank pointed out that,

when a special verdict under Fed. R. Civ. P. 49(a) is

used, “the judge need not—should not—give any charge

about the substantive legal rules beyond what is reason-

ably necessary to enable the jury to answer intelligently

the question put to them. As, accordingly, the jury is less

able to know whether its findings will favor one side or

the other, the appeal to the jurors’ cruder prejudices will

frequently be less effective.” Skidmore v. Baltimore & O.

R. Co., 167 F.2d 54, 66 (2d Cir.), cert. denied, 335 U.S.

816 (1948).

In this case the jury was requested to return a special

verdict on the question whether Pan Am engaged in

wilful misconduct. Even though the jury’s responsibility

was limited to finding the facts, the trial court, over ob-

jection, instructed the jury on the legal consequences that

would flow from its findings. Thus, the jury was told

that its finding of fact would determine whether or not

plaintiff’s damages would be limited in accordance with

international law. The court of appeals affirmed and con-

eluded that a district court has broad discretion in in-

structing juries under Rule 49(a). This Court should

grant review to determine whether, pursuant to the text

of Rule 49(a),** the trial judge has broad discretion to

33 Rule 49(a) states in part: “The court shall give to the jury

such explanation and instruction concerning the matter thus sub-

mitted as may be necessary to enable the jury to make its findings

upon each issue.”’ (Emphasis added.)

inform the jury of the legal effects of its special verdict

findings or whether the court’s explanations should be

limited to those that the judge explicitly finds “may be

necessary” to enable them to make their findings.*

The court below observed that, “[t]he circuits are

split on the question of whether a district judge abuses

his discretion when he informs the jury of the effect of

its answers to special verdict interrogatories.” 871 F.2d

at 815, App. 4a. The Fifth Circuit is in full accord with

the court below on this issue.™ See Perricone v. Kansas

$4 One cannot reasonably claim that it was “necessary” in this

case to inform the jury of the legal effects of their findings in

order to enable them to make those findings. The only reason

furnished by the district court, and repeated by the court of ap-

peals, is the fear that the jury might leap to an incorrect con-

clusion respecting the legal effect of its findings if not so instructed.

Tr. May 12, 1986, at 3-10, esp. 5-6, App. 85a-89a; 871 F.2d at 815,

App. 5a-6a. But this concern is implausible. With the plaintiffs

contending that Pan Am was guilty of wilful misconduct and Pan

Am contending that it was not, there was no way that a jury

could think that a finding of wilful misconduct would hurt plain-

tiffs.

To be sure, the court of appeals also stated: “Since the jury

was charged with deciding whether Pan Am gave the passengers

adequate notice of the damages limitation of the Warsaw Conven-

tion, the jury obviously had to be informed about the limitation.”

871 F.2d at 815, App. 5a. That rationale, however, overlooks Pan

Am’s position from the beginning of this case—namely, that the

adequate notice issue should not have been in the case at all.

While the court below did not reach the issue, Pan Am’s position

was clearly correct in view of this Court’s ruling in Chan Vv.

Korean Air Lines, supra, that “the Warsaw Convention does not

eliminate the limitations on damages for passenger injury or

death as a sanction for failure to provide adequate notice of that

limitation.” 109 S.Ct. at 1684. Hence, the erroneous decision to

allow the plaintiffs to raise a claim of inadequate notice cannot

be used to defend the trial judge’s informing the jury of the legal

effect of its findings.

35 The court below also cited Vinieris v. Byzantine Maritime

Corp., 731 F.2d 1061, 1065 (2d Cir. 1984), but the decision in that

case was based in large part on the court’s determination that

the jury had to understand the legal effect of its answers in order

to evaluate the testimony of the principal witnesses in the case,

City Southern Ry. Co., 704 F.2d 1376, 1378 (5th Cir.

1983).

On the other hand, four circuits do not agree. See

Thedorf v. Lipsey, 237 F.2d 190, 193 (7th Cir. 1956)

(“Under Rule 49(a), . . . the trial judge has the re-

sponsibility of applying appropriate legal principles to

the facts found by the jury. ... In such a situation the

jury is not entitled to information concerning the legal

principles which the judge will apply to their findings.”’) ;

Gullett v. St. Paul Fire & Marine Ins. Co., 446.F.2d 1100,

1105 (7th Cir. 1971) (“The purpose of a special verdict

is to concentrate the jury’s attention exclusively upon

the fact questions put to them.’’) ; Ratigan v. New York

Cent. R. Co., 291 F.2d 548, 554 (2d Cir.), cert. denied,

368 U.S. 891 (1961) (“As a matter of federal procedure

it was unnecessary and improper also to submit ques-

tions containing the conclusions of law to be drawn from

the findings of fact.”) ; Millard v. Municipal Sewer Auth.,

442 F.2d 539, 541 (3d Cir. 1971) (“not necessary” to

instruct jury on legal effects) ; Cate v. Good Bros., 181

F.2d 146, 149 (8d Cir.), cert. denied, 340 U.S. 826

(1950) (“The jury did not require information or guid-

ance concerning the legal principles which the judge

would apply to their findings.”) ; Walther v. Omaha Pub-

lic Power District, 412 F.2d 1164, 1170 (8th Cir. 1969)

(“When a special verdict is used, the court need give the

jury only such explanation and instructions as may be

the employer’s captain and the plaintiff. Thus, instruction on the

legal effect may have been necessary.

With respect to a somewhat different issue, an opinion by then

Circuit Judge Blackmun rejected a claim that instructions were

improper when, even though the jury was not informed of the

legal effect of its finding, it might have been able to infer the legal

effect of its findings from the judge’s charge. Lowery v. Clouse,

348 F.2d 252, 259-61 (8th Cir. 1965). In this case, the jury ob-

viously would have inferred which side would benefit from a find-

ing of wilful! misconduct, but it would have been unable to deter-

mine the legal effect of its findings on plaintiffs’ recovery unless

so informed.

EEE RS NC eee Tr oe TT ee eee yyeeeer’ | ee re

necessary to enable the triers of fact to make intelligent

findings.’’).

Apart from the split in the circuits, the question pre-

sented has intrinsic importance to the proper functioning

of the jury system and the enforcement of laws and

treaties that do not enjoy popular support. Informing the

jury of the legal effects of its findings when that is not

“necessary” vitiates the advantages of a special verdict—

1.€., separating the jury’s fact-finding from its prejudices

as to who ought to prevail—and provides ample oppor-

tunity for the “jurors’ cruder prejudices” to determine

their findings. Similarly, informing the jury of the ef-

fect of unpopular laws and treaties, as this case shows,

constitutes an invitation for the jury to nullify the law

or treaty.

CONCLUSION

A writ of certiorari should be granted to review the

judgment of the United States Court of Appeals for the

Ninth Circuit.

Respectfully submitted,

RICHARD M. SHARP *

FREDERICK C. SCHAFRICK

SHEA & GARDNER

1800 Massachusetts Ave., N.W.

Washington, D.C. 20036

(202) 828-2000

CLINTON H. CoDDINGTON

RICHARD G. GROTCH

CODDINGTON, HICKS

& DANFORTH

3000 Sand Hill Road

Building I, Suite 185

Menlo Park, CA 94025

(415) 854-8600

Attorneys for Petitioner

Pan American

World Airways, Inc.

July 28, 1989 * Counsel of Record

APPENDIX

UNITED STATES COURT OF APPEALS

NINTH CIRCUIT

No. 86-6453

IN RE AIRCRASH IN BALI, INDONESIA.

JOHN P. CAUSEY, JR., individually and as Executor of

the Estate of JOHN P. CAUSEY, SR., and as Adminis-

trator with will annexed of the Estate of VIRGINIA D.

CAUSEY, et al., Plaintiffs-A ppellees,

LEE B. ZINKE, et al.,

Defendants,

and

PAN AMERICAN WORLD AIRWAYS, INC.,

Defendant-A ppellant.

Argued and Submitted Feb. 7, 1989

Decided March 27, 1989

Appeal fom the United States District Court

for the Central District of California

Clinton H. Coddington, Randolph S. Hicks, Richard G.

Grotch, Coddington, Hicks & Danforth, Menlo Park, Cal.,

for defendant-appellant.

Robinson, Robinson & Phillips, Mark P. Robinson, John

D. Rowell, Los Angeles, Cal., for plaintiffs-appellees

Causey.

Nicholas R. Allis, Butler, Butler & Osborne, James G.

Butler, Los Angeles, Cal., for plaintiffs-appellees Ryder.

Before FLETCHER, PREGERSON and LEAVY, Cir-

cuit Judges. .

PER CURIAM:

This case involves the crash of Pan Am Flight 812

in Bali on April 22, 1974 in which the crew and all the

passengers were killed. Pan American World Airways,

Inc. (Pan Am) appeals an adverse jury verdict claim-

ing numerous trial errors in evidentiary rulings and in-

structions and comments to the jury. We affirm.

The plaintiffs are the representatives of three deceased

passengers—John Causey, Virginia Causey, and Wilson

Ryder. According to the plaintiffs, the crash into a

mountain side occurred because the pilot and his crew

failed to respond to signals warning them of their dan-

gerous location. At the end of the first trial, the jury

found that Pan Am was liable for negligence, but not

willful misconduct. The district court, holding that the

limitations of the Warsaw Convention (‘‘the Convention”)

did not apply, entered judgment for the full amount of

the jury damage award.

On appeal, we held that the district court erred in

ruling that the Convention did not apply in this case.

We also held that the pilot, Captain Zinke’s proficiency

records were improperly excluded. We remanded for a

second trial on two limited issues: (1) whether there was

willful misconduct of corporate management or the crew;

and (2) whether Pan Am had complied with the pas-

senger notice requirements of the Convention.’ Jn re

Airerash in Bali, Indonesia, 684 F.2d 1301, 1313 (9th

Cir.1982). ‘

The same district judge presided over the first and

second trials. At the end of the second trial, the jury

returned answers to special interrogatories stating that:

(1) Captain Zinke and the other members of the crew

were not liable for willful misconduct; (2) Pan Am’s

management was liable for willful misconduct in entrust-

ing Flight 812 into the care of Captain Zinke; (3) Pan

Am’s passenger tickets contained an adequate warning of

the Convention’s damages limitation; and (4) Pan Am

failed to display signs wrning of this limitation. We

have jurisdiction pursuan’ to 28 U.S.C. § 1291.

Pan Am argues that the jury instructions on willful

misconduct were erroneous. “In reviewing jury instruc-

tions, the court must consider whether the instructions

as a whole were misleading or inadequate to guide the

jury’s determination.” United States v. Pazsint, 703

F.2d 420, 424 (9th Cir.1983). In deciding whether the

jury was misled, the court should also consider the

guidance to the jury provided by the verdict form. See

Boggs v. Lewis, 863 F.2d 662, 666 (9th Cir.1988)

(“[t]his court reviews the jury instructions and the ver-

dict form together to determine whether the jury was

misled”’) .

We have reviewed the jury instructions and the ver-

dict form used in this case and conclude that the jury

was not misled. Although there is some merit to Pan

Am’s contention that the trial judge incorrectly substi-

tuted the word “or” for the word “and” in one of the

1The Convention limits damages in airline crashes to $75,090

per passenger except where the crash was the result of willful

misconduct or where the passenger was not given adequate notice

of the Convention’s damages limitation.

instructions regarding willful misconduct, the judge’s

other instructions on willful misconduct and the verdict

form were adequate to communicate to the jury the re-

quirements for a finding of willful misconduct.

Ill

Pan Am next argues that the judge’s improper re-

marks influenced the jury’s finding that Pan Am en-

gaged in willful misconduct. We will reverse on the

basis of a judge’s improper remarks if the judge “ex-

presses [his] opinion on an ultimate issue of fact in

front of the jury or [argues] for one of the parties.”

Shad v. Dean Witter Reynolds, Inc., 799 F.2d 525, 531

(9th Cir.1986). See also Handgards, Inc. v. Ethicon,

Inc., 743 F.2d 1282, 1289 (9th Cir.1984) (noting that

“lylery few cases outside of the criminal law area sup-

port an appellate finding of judicial misconduct during

trial”). Pan Am has failed to meet its burden of show-

ing that the district judge expressed his opinion about

the ultimate issues in this case or argued on behalf of

the plaintiffs. See also Maheu v. Hughes Tool Co., 569

F.2d 459, 471 (9th Cir.1978); Shad, 799 F.2d at 531

(“In order to aid the jury in reaching a just conclusion,

it is within the trial court’s discretion to call attention

to evidence it believes important.’’) .

Pan Am argues that the district court erred in inform-

ing the jury of the consequences of a finding of willful

misconduct. The judge told the jury that, if the jury

found against the plaintiffs on the issue of willful mis-

conduct, the plaintiffs would be limited to the amount of

damages permitted by the Warsaw Convention.

The circuits are split on the question of whether a

district judge abuses his discretion when he informs the

jury of the effect of its answers to special verdict inter-

rogatories. In Vinieris v. Byzantine Maritime Corpora-

tion, 731 F.2d 1061, 1065 (2d Cir.1984), the Second

Circuit noted that “the theory .. . that juries should not

be informed of the legal effect of their answers in Rule

49(a) cases... has been the subject of both judicial and

scholarly criticism,” and reversed in part because the

trial court failed to inform the jury of “how large a

financial stake plaintiff had in the outcome of the case.”

The Seventh Circuit has adopted the opposite view. See

Gullett v. St. Paul Fire & Marine Insurance Co., 446

F.2d 1100, 1105 (7th Cir.1971) (“[t]he purpose of a

special verdict is to concentrate the jury’s attention ex-

clusively upon the fact questions put to them. Comments

on the legal effects of the answers could in an appro-

priate case have a prejudicial effect of clouding this pur-

pose.”’).

Our court has suggested by way of guidance to the dis-

trict court on retrial, in the context of another case, that

the district court had. not abused its discretion by re-

fusing to inform the jury of the consequences of its

answers to interrogatories. Carvalho v. Raybestos-

Manhattan, Inc., 794 F.2d 454, 457 n. 2 (9th Cir.1986).

We conclude in the case before us that the district court’s

decision to inform the jury of the effect of a finding of

willful misconduct was not an abuse of discretion.

Since the jury was charged with deciding whether

Pan Am gave the passengers adequate notice of the dam-

ages limitation of the Warsaw Convention, the jury ob-

viously had to be informed about that limitation. See

Fed.R.Civ.P. 49(a) (“[t]he court shall give to the jury

such explanation and instruction concerning the matter

thus submitted as may be necessary to enable the jury

to make its findings on each issue”). If the jury had not

been informed of the connection between the plaintiffs’

arguments that Pan Am committed willful misconduct

and the damages limitation, the jury would have deduced

a connection on its own and it might have been erro-

neous. The district judge did not abuse his dicretion

a a a a ae ee ee ee

when he decided to eliminate the risk that the jury would

deduce an inaccurate connection between a finding of

willful misconduct and the damages limitation. See 9

Wright & Miller, Federal Practice and Procedure § 2509,

at 513 (1971) (“an attempt to keep the jury in the dark

as to the effect of its answers is likely to be unavailing,

and there is always the danger that the jury will guess

wrong about the law, and may shape its answers to the

special verdicts, contrary to its actual beliefs, in a mis-

taken attempt to ensure the result it deems desirable”).

Pan Am next contends that the admission of the Hud-

son and Thomas reports constituted reversible error. The

Hudson report is a Federal Aviation Administration

(“FAA”) report on Pan Am’s safety record and proce-

dures, which was commenced shortly after the Bali

crash; the Thomas report is a Pan Am report on Pan

Am’s safety record and problems, which was apparently

completed just before the Bali crash.

The -standard of review for a district court’s eviden-

tiary rulings is deferential. “A trial court has broad

discretion to admit or exclude evidence, and we review

its decision only for an abuse of that discretion. Even

if there is error, reversal is appropriate only if we can

say that the error affected the substantial rights of the

parties.” In re Aircrash in Bali, 684 F.2d at 1313 (cita-

tion omitted).

The Hudson report was properly admitted pursuant

to Fed.R.Evid. 803(8)(C), which creates a hearsay ex-

ception for public documents. Contrary to Pan Am’s

assertions, the Hudson report was not inadmissible under

Rule 803(8)(C) simply because it includes evaluative or

normative findings. See Beech Aircraft Corp. v. Rainey,

US. , 109 S.Ct. 439, 445-50, 102 L.Ed.2d 445

(1988) ; Jenkins v. Whittaker Corporation, 785 F.2d 720,

726 (9th Cir.1986) (“[c]Jonclusions and opinions do not

render reports ipso facto inadmissible’). Further, Pan

Am has failed to demonstrate that the report was un-

trustworthy or unduly prejudicial.

Pan Am argues that the district court erred in admit-

ting the Thomas report pursuant to Rule 801(d) (2) (D).

This rule provides that statements which are not hear-

say include admissions of a party opponent and defines

such admissions as “a statement by [the party’s] agent

or servant concerning a matter within the scope of his

agency or employment, made during the existence of the -

relationship.” Since all but one of the eight authors of

the report were experienced Pan Am crew members, we

hold that the Thomas report was admissible as an ad-

mission of Pan Am employees concerning matters within

the scope of their employment. As with the Hudson re-

port, Pan Am has failed to support its contention that

the Thomas report was unduly prejudicial.

Pan Am also argues that the Hudson report and the

Thomas report in effect were subsequent remedial meas-

ures and were thus inadmissible under Fed.R.Evid. 407,

which states that measures taken after an event which

would have made the event less likely to occur are not

admissible to prove culpable conduct. The purpose of

Rule 407 is to ensure that prospective defendants will not

forego safety improvements because they fear that these

improvements will be used against them as evidence of

their liability.

Since the Thomas Report, a comprehensive report

many months in the making, was dated only one day

after the Bali crash, it is patently clear it was not a

response to the crash. We find no basis for treating the

Thomas Report as a subsequent remedial measure.

Although the question is closer, we conclude the Hud-

son Report was not a subsequent remedial measure

within the meaning of Rule 407. The Hudson investi-

gation began five days after the Bali crash, and the

report is dated June 13, 1975 (about 14 months after the

crash). However, the Hudson report does not qualify as

a subsequent remedial measure because it was prepared

by the FAA without the voluntary participation of Pan

Am.?

A number of courts outside this circuit have adopted

the view that Rule 407 applies only to subsequent reme-

dial measures by the defendant. See, e.g., Koonce v.

Quaker Safety Products & Mfg. Co., 798 F.2d 700, 719-

20 (5th Cir.1986). The purpose of Rule 407 is not im-

plicated in cases involving subsequent measures in which

the defendant did not voluntarily participate. Where the

defendant has not voluntarily participated in the subse-

quent measure at issue, the admission of that measure

into evidence does not “punish” the defendant for his

efforts to remedy his safety problems. In this case, Pan

Am’s management, although to be commended for its co-

operation, nonetheless was legally obligated to cooperate

with the FAA’s investigation. See 14 C.F.R. § 13.3.

Thus, the admission of the Hudson report did not penal-

ize Pan Am for its voluntary participation in safety

measures.’

2 We need not address the issue of whether post-accident studies

generally qualify as remedial measures under Rule 407. Two courts

have held that “subsequent remedial measures” include “only the

actual remedial measures themselves and not the initial steps to-

ward ascertaining whether any remedial measures are called for.”

Fasanaro v. Mooney Aircraft Corp., 687 F. Supp. 482, 487 (N.D.

Cal. 1988) ; Rocky Mountain Helicopters v. Bell Helicopters Textron,

805 F.2d 907, 918 (10th Cir. 1986) (same). But see Alimenta, Inc.

v. Stauffer, 598 F. Supp. 934, 940 (N.D. Georgia 1984) (post-event

accounting report in civil fraud suit is a subsequent remedial

measure under Rule 407).

8In its brief, Pan Am also objects to the admission of the

Indonesian report. At oral argument, Pan Am’s counsel conceded

that Pan Am was no longer pursuing its objection to the Indonesian

report because that report addresses only the culpability of Flight

812.

Pan Am’s final argument is that the district court’s

instruction on the Convention’s notice requirement was

erroneous. Under the Warsaw Convention, the Conven-

tion’s damages limitation does not apply if the defendant

committed willful misconduct or if the passengers in

question received inadequate notice. Since we uphold

the jury’s finding that Pan Am’s management committed

willful misconduct and therefore hold that the Conven-

tion’s damages limitation is inapplicable in this case, we

need not address Pan Am’s challenges to the notice in-

struction.

CONCLUSION

We affirm the district court.

10a

OFFICE OF THE CLERK:

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

NOTICE OF ENTRY OF JUDGMENT

Judgment was entered in this case as of the file date

on the attached decision of the Court.

lla

UNITED STATES COURT OF APPEALS

NINTH CIRCUIT

Nos. 79-3341, 78-3761—78-3763

IN RE AIRCRASH IN BALI, INDONESIA ON APRIL 22, 1974

JOHN P. CAUSEY, JR., ETC., et al.,

Plaintiffs-Desigated Appellants,

PAN AMERICAN WORLD AIRWAYS, INC., ETC.,

Defendants-Designated Appellees.

SIMONE RYDER, ETC., et al.,

Plaintiffs-Desigated Appellants,

Vv.

PAN AMERICAN WORLD AIRWAYS, INC., ETC.,

Defendants-Designated Appellees.

MARGARET G. JOHNS, ETC., et al.,

Plaintiffs-Designated Appellants,

Vv.

PAN AMERICAN WORLD AIRWAYS, INC., ETC.,

Defendants-Designated Appellees.

Argued and Submitted Oct. 6, 1986

Decided Aug. 24, 1982

12a

Appeal from the United States District Court

for the Central District of California

Clinton H. Coddington, Tucker & Coddington, Los

Angeles, Cal., Mark H. Gallant, Washington, D.C., for

American World Airways.

James G. Butler, Los Angeles, Cal., for Ryder.

Mark P. Robinson, Los Angeles, Cal., for Causey.

Nicholas R. Allis, Geneva, Switzerland, for amicus.

Withdrawn and resubmitted—January 29, 1982.

Before FLETCHER and PREGERSON, Circuit Judges,

and SOLOMON,” District Judge.

FLETCHER, Circuit Judge:

These suits arise out of an aircrash in Bali, Indonesia,

on April 22, 1974, in which plaintiffs’ decedents and 104

other persons were killed. A jury found defendant Pan

American World Airways, Inc. (Pan Am) negligent, and

awarded damages in the amount of $300,000 to the Causey

plaintiffs and $651,500 to the Ryder plaintiffs. The dis-

trict court declined to reduce the verdicts to the limits

imposed by the Warsaw Convention, October 12, 1929, 49

Stat. 3000 (1934), 187 L.N.T.S. (1929) (arts. 17 & 22).

Defendant-designated appellee Pan Am appeals from

the trial court’s ruling that the Warsaw Convention is

not applicable, and plaintiffs-designated appellants cross-

appeal to attack evidentiary rulings made by the court in

the course of trial.

13a

BACKGROUND

A. The Warsaw Convention

The Warsaw Convention is a multilateral treaty. The

Convention was drafted in 1929 and adhered to by most

countries whose airlines have international routes. The

United States adhered to the treaty in 1934. 49 Stat.

3000 (1934). The Convention standardizes, among the

contracting countries, the documentation required for

passengers and cargo on international ' flights, id. at arts.

3, 4, 5-16, and makes uniform various procedural rules

relating to claims for loss and damage, id. at art. 26-31.

It also limits the liability of air carriers in the event of

accident or loss, id. at art. 22.

The Convention creates an express presumption that

any accident is the result of carrier negligence unless

the carrier can prove that all necessary measures were

taken to avoid damages, or that it was impossible to take

such measures. Jd. at art. 17, 20. The Convention excepts

from the limit on the carrier’s liability, injury or death

1 The provisions of the Warsaw Convention apply only to “inter-

national transportation,” which is defined in the Convention as

any transportation in which, according to the contract made

by the parties, the place of departure and the place of destina-

tion, whether or not there be a break in transportation or a

transshipment, are situated either within the territories of two

High Contracting Parties, or within the territory of a single

High Contracting Party, if there is an agreed stopping place

within a territory subject to the sovereignty, suzerainty, man-

date or authority of another power, even though that power is

not a party to this convention. Transportation without such

an agreed stopping place between territories subject to the

sovereignty, suzerainty, mendate, or authority of the same

High Contracting Party shall not be deemed to be international

for the purposes of this convention.

Art. 1(2), Warsaw Convention, Oct. 12, 1929, 49 Stat. 3000 (1934),

137 L.N.T.S. (1929).

l4a

caused by the carrier’s “willful misconduct.” Jd. at art.

25. The Convention permits the passenger and the car-

rier to contract for a higher limit on liability, id. at art.

22, but invalidates any contract that purports to lower

or remove the carrier’s liability, id. at art. 23. Other

provisions require the application of forum law to certain

questions of procedure, id. at art. 28(2), contributory

negligence, id. at art. 21, and to the determination of

who has the right to bring suit and what their respective

rights are, id. at art. 24(2). Article 28 regulates venue,

and article 29 sets the statute of limitations for actions

brought under the Convention. Other technical provisions

are not relevant here. -

Because of dissatisfaction with certain provisions of

the Warsaw Convention, particularly the low limit set

for personal injury or death,? an international conference

convened at The Hague in September, 1955, for the pur-

pose of amending the Convention. The agreement eventu-

ally raised the limit on carrier liability for injury from

$8,300 to roughly $16,690, and amended the language of

Article 25 relating to “willful misconduct.” Hague Proto-

col, September 28, 1955, 478 U.N.T.S. 371; see Lowen-

feld and Mendelsohn, The United States and the War-

saw Convention, 80 Harv.L.Rev. 497, 504-09 (1967) [here-

inafter cited as Lowenfeld and Mendelsohn]. The United

States has not adhered to the Hague Protocol, at least in

part because the limit on liability is still too low to

satisfy critics of the Warsaw Convention. Lowenfeld and

Mendelsohn, 80 Harv.L.Rev. at 509-16, 532-46; see Senate

2 Article 22 sets a limit of 125,000 French francs for injury to

passengers, and 250 francs per kilogram of goods or checked bag-

gage. On the date of the accident, the limitation for personal

injury in U.S. dollars was approximately $10,000. In the Matter

of Warsaw Convention Liability Limitations as Expressed in U.S.

dollars, CAB Order 74-1-16 (Jan. 3, 1974). However, the treaty

limitation is expressed in gold “Poincare” francs, and what the

present value of the limitations may be, given the increased dollar

value of gold, is an cpen question.

l5a

Comm. on Foreign Relations, Hague Protocol to Warsaw

Convention, S. Exec. Rep. No. 3, 89th Cong., Ist Sess.,

and appendix (1965). Instead, in November, 1965, the

United States denounced the Warsaw Convention, effective

May, 1966 (the Convention requires six months’ notice

of withdrawal). 50 Dep’t State Bull. 923 (1963). In an

accompanying press release, the United States offered to

withdraw its denunciation before it became effective if,

prior to May, 1966, an international agreement could be

reached that would substantially raise the limits on lia-

bility. Id. at 924.

In response, in 1966, international air carriers reached

a private agreement, with the participation of the Depart-

ment of State, the Civil Aeronautics Board, and the In-

ternational Air Transport Association. Montreal Agree-

ment, CAB Order No. E-23680, 31 Fed.Reg. 7302 (1966).

The Montreal Agreement provides that the signatory air-

lines accept absolute liability for injury to passengers, up

to a limit of $75,000 per passenger. The Agreement has

the status of a special contract under article 22 of the

Warsaw Convention. It applies to international trans-

portation as defined in the Warsaw Convention, on air-

lines signatory to the agreement, provided that the in-

tended journey includes a point of departure or agreed

stopping place in the United States. Montreal Agree-

ment § 1, 31 Fed.Reg. 7302.

B. Proceedings Below

The plaintiffs in the case at bar challenged the applica-

tion, validity, and constitutionality of the Warsaw Con-

vention, the Hague Protocol and the Montreal Agreement.

They also attempted to avoid the liability limitations by

showing “willful misconduct” on the part of Pan Am.

The jury found no willful misconduct. The Causey plain-

tiffs, who would have been entitled to the benefit of the

Montreal Agreement’s provision of strict liability up to a

maximum of $75,000, chose instead to attack the Agree-

ment and go to trial on negligence theories.

16a

After the jury returned its verdict, the trial court ruled

that under California law a decedent cannot by contract

compromise his survivor’s right to wrongful death re-

covery. Hence the contractual limitations imposed by the

Warsaw Convention and subsequent agreements could

have no operation. In re Air Crash in Bali, Indonesia,

462 F.Supp. 1114, 1126 (C.D.Cal.1978). The court thus

never reached plaintiffs’ challenge to the constitutionality ~

of the Convention.

ANALYSIS

A. The District Court’s Decision

The district court, in refusing to apply the limitations

on liability imposed by the Warsaw Convention, relied on

California law. It reasoned that the Warsaw limitation

is based on a contract between the passenger and the

carrier, because (1) the Convention requires delivery of

the ticket and written notice to the passenger of the

limitation on liability before the limitation can be in-

voked, 462 F.Supp. at 1119-20; see Warren v. Flying

Tiger Line, 352 F.2d 494 (9th Cir. 1965); (2) the

passenger and the carrier may, by contract, agree to a

higher limit on liability, 462 F.Supp. at 1120; and (3)

the applicability of the Convention depends on the place

of departure and the destination stated in the contract of

carriage between the parties, id. at 1119. California does

not permit a decedent to compromise by contract his sur-

vivor’s right to wrongful death recovery. Jd. at 1117;

See Robison v. Leigh, 153 Cal.App.2d 730, 315 P.2d 42

(1957); Earley v. Pacific Electric Ry. Co., 176 Cal. 79,

167 P. 518 (1917). Any limitation based on contract with

the decedent, therefore, can have no application against

survivors under California law. The court then examined

the federal public policy behind the Warsaw Convention.

Finding that federal policy does not require broad ap-

plication of the Convention’s limitations, 462 F.Supp. at

17a

1124-26 (citing 1 L. Kreindler, Aviation Accident Law,

§ 11.01(2), (5) (1975)), the court entered judgment on

the jury’s verdict for plaintiffs.*

B. Application of California Law

1. Choice of Law

The district court’s decision presents two threshold ques-

tions: (1) Was the proper choice of law made? (2) Does

the Warsaw Convention preempt local law in respect to

limitation of liability for wrongful death? The Warsaw

Convention requires recourse to local law to determine

certain issues. See page 3, supra. This is not disputed,

but Pan Am challenges the court’s choice of California

law. The jurisdiction of the federal district court in

California is not challenged. It is proper both for pur-

poses of diversity jurisdiction and under the jurisdictional

provisions of the Warsaw Convention. Pan Am contends,

however, that either Virginia law or the law of New

South Wales, Australia, should be applied. The Causey

decedents were residents of Virginia, the Ryder decedent

a resident of New South Wales. Either of these states’

laws, apparently, would impose a low dollar limit on

wrongful death recovery even in the absence of the War-

saw Convention.

Pan Am first argues that Virginia law should govern

the Causey case because the Causeys first filed in Virginia

and then transferred the action to California. See Van

Dusen v. Barrack, 376 U.S. 612, 639, 84 S.Ct. 805, 820,

11 L.Ed.2d 945 (1964). We find this argument un-

persuasive since the Causey plaintiffs filed a second

action in California, and it is on that action that the

Causeys chose to go to trial. The transferred case was

dismissed.

3 Because the court held the Convention limitations inapplicable

to the present suit, it did not reach the issues of notice and ticket

delivery. See note 13, infra.

18a

Since both the Causey and Ryder cases were filed in

California, California’s choice of law rules must be ap-

plied. Klaxon v. Stentor Electric Co., Inc., 313 U.S. 487,

496, 61 S.Ct. 1020, 1021, 85 L.Ed. 1477 (1941). Plain-

tiffs and Pan Am appear to agree on the substance of

California’s choice of law rule, but disagree on its appli-

cation to the facts of this case. As both parties agree,

California has adopted the “governmental interest” ap-

proach to questions of conflicts of laws. Hurtado v. Su-

perior Court, 11 Cal.8d 574, 522 P.2d 666, 114 Cal.Rptr.

106 (1974). Under Hurtado, California will decline to

apply its own law to a case brought in California only

if it is shown that another state has a greater interest

in having its law applied. Jd. at 581, 522 P.2d at 670,

114 Cal.Rptr. at 110. The instant case presents a classic

example of a “false conflict,” i.e., a case in which more

than one law could be applied, but in which only one

state has any real interest in seeing its law applied. 7d.

at 581 & n.3, 522 P.2d at 670 & n.3, 114 Cal.Rptr. at

110 & n.3. As California has recognized, a limitation on

wrongful death recoveries is intended to protect defend-

ants from large verdicts. Jd. at 583-84, 522 P.2d at 671,

114 Cal.Rptr at 111. It is not an attempt to limit the

compensation of plaintiffs. Pan Am has its principal place

of business in California; plaintiffs reside in Virginia and

Australia. Neither Virginia nor Australia has an interest

in protecting a California defendant from wrongful death

awards and “alifornia has chosen not to protect its resi-

dent defendants.* We conclude therefore that the trial

court was correct in applying California law.

* We also note that Virginia apparently does not have an interest

in limiting wrongful death recoveries. Although Virginia law

placed a $25,000 limit on dollar recoveries at the time the Causey

case was filed, the Virginia legislature had already voted to repeal!

the law. Virginia now places no limit on recovery. Compare,

Va. Code Ann. § 8-636 (Cum. Supp. 1973) with Va. Code Ann.

§ 8.01-52 (Cum. Supp. 1974). 7

— |

19a

2. Preemption

The district court apparently did not consider whether

the Warsaw Convention preempts the application of Cali-

fornia’s rule regarding the limitation by contract of

wrongful death recoveries.

Although the district court may have concluded that

the Warsaw Convention did not expressly preempt Cali-

fornia law, it did not consider whether the application of

California law would conflict with the Congressional

scheme embodied in the Convention. See Ray v. Atlantic

Richfield Co., 485 U.S. 151, 157-58, 98 S.Ct. 988, 994, 55

L.Ed.2d 179 (1978); City of Burbank v. Lockheed Air

Terminal, Inc., 411 U.S. 624, 6338, 93 S.Ct. 1854, 1859,

36 L.Ed.2d 547 (1973). This is clearly not a case in

which Congress intended to preempt all state legislation

in the field, since the Convention specifically requires the

application of local law to some issues. See page 3, supra.

However, federal law may also preempt the application of

state law where the state law “stands as an obstacle to

the accomplishment and execution of the full purposes and

objectives of Congress.” Hines v. Davidowitz, 312 U.S.

52, 67, 61 S.Ct. 399, 404, 85 L.Ed. 581 (1941).

Congress ratified’ the Warsaw Convention in 1934.

The Convention’s application is to international air trans-

portation. Its purposes are two-fold: providing uniformity

in respect to documentation and certain procedural mat-

ters, and imposing limitations on liability. When the

Convention was transmitted to the Senate for ratification,

it was accompanied by a letter from then-Secretary of

State Cordell Hull, which stated in part:

5 We reject plaintiffs’ claim that the Warsaw Convention is not

a valid treaty of the United States because not ratified. The Con-

stitution requires the Senate’s “consent” to a treaty, art. II § 2.

The consent appears at 78 Cong. Rec. 11,582 (1934). Were that in

error, the Senate has had forty-seven years in which to disclaim

its “consent”. That it has not done so, we find persuasive.

20a

It is believed that the principle of limitation of lia-

bility will not only be beneficial to passengers and

shippers as affording a more definite basis of recovery

and as tending to lessen litigation, but that it will

prove to be an aid in the development of international

air transport, as such limitation will afford the air

carrier a more definite and equitable basis on which

to obtain insurance rates, with the probable result

that there will eventually be a reduction of operating

expenses for the carrier and advantages to the travel-

ers and shippers in the way of reduced transportation

charges.

S.Doc.Exec.G., 73d Cong., 2d Sess. 3-4 (1934). Although

there were no hearings and no debate in the Senate at

the time the Convention was ratified, Secretary Hull’s

letter and subsequent history make it clear that the

limitation on liability was an important feature of the

Convention. See, e.g., Hearings on the Hague Protcol to

the Warsaw Convention Before the Senate Committee on

Foreign Relations, 89th Cong., 1st Sess. 49-54 (1965) ;

S.Rep. 2032, 88th Cong., 1st Sess. (1963); H.R. 8386,

88th Cong., Ist Sess. (1963); Senate Comm. on Foreign

Relations, Hague Protocol to Warsaw Convention, S. Exec.

Rept. No. 3, 89th Cong., 1st Sess. (1965). See generally,

Lowenfeld and Mendelsohn, 80 Harv.L.Rev. at 509-16,

532-46.

Whatever its benefits were in 1934, the district court

noted that the low limitation on liability cannot be justified

today by the conditions that existed in 1934, 462 F.Supp.

at 1124-26. The court observed that the airline industry

is no longer in its infancy: “[t]he pioneering conditions

and the lack of technical advancement and passenger

safeguards which faced the industry when Warsaw was

adopted have been supplanted by a technologically and

commercially mature industry.” Jd. at 1125. Unfortu-

nately, we know of no doctrine that would allow us to

examine congressional enactments to see if they still serve

~ ¥ fo

2la

the purpose for which they were designed. If the War-

saw Convention was intended to preempt state law in the

area of liability for wrongful death on international

flights, we may not avoid preemption by substituting our

judgment for that of Congress to hold that the Conven-

tion has outlived its usefulness. Furthermore, Congress

has had ample opportunity to reconsider the wisdom of

the Convention, but it has yet to effect any changes. See,

e.g. Hearings on the Hague Protocol to the Warsaw Con-

vention Before the Senate Committee in Foreign Rela-

tions, 89th Cong., 1st Sess. (1965).

The application of California law suggested here neces-

sarily conflicts with the congressional scheme. Neither

uniformity nor an effective limitation of the airlines’

liability could be achieved if state law doctrines could be

invoked to circumvent the application of the limitation.

Accordingly, we hold that California law is preempted by

the Warsaw Convention to the extent that California law

would prevent the application of the Convention’s limita-

tion on liability. See Bradfield v. TWA, 88 Cal.App.3d

681, 687, 152 Cal.Rptr. 172, 175 (1979).

III

CONSTITUTIONALITY OF THE WARSAW

CONVENTION

Plaintiffs contend that if California law is preempted

by the Warsaw Convention, the limitation on liability is

unconstitutional.®

6 Pan Am and the United States argue that the Ryder plaintiffs,

residents of Australia, have no standing, or limited standing, to

raise constitutional objections, citing, e.g., Pauling v. McElroy, 278

F.2d 252, 254 n.3 (D.C. Cir. 1960). The fifth amendment applies

to “persons,” however, which certainly includes persons who have

a valid claim over which our federal courts have jurisdiction. See

Wong Wing v. United States, 163 U.S. 228, 238, 16 S.Ct. 977, 981,

41 L.Ed. 140 (1896) ; Yick Wo v. Hopkins, 118 U.S. 356, 369, 6 S.Ct.

1064, 1070, 30 L.Ed. 220 (1886). Although there are undoubtedly

22a

Although courts are not often called upon to review the

constitutionality of treaty provisions, there is no doubt

that the power to make treaties is circumscribed by sub-

stantive provisions of the Constitution, and that the courts

are competent to pass on the constitutionality of treaties.

Reid v. Covert, 354 U.S. 1, 16-19, 77 S.Ct. 1222, 1230-

1231, 1 L.Ed.2d 1148 (1965); see Geofroy v. Riggs, 133

U.S. 258, 267, 10 S.Ct. 295, 297, 33 L.Ed. 642 (1898).

See generally, W. Cowles, Treaties and Constitutional

Law: Property Interferences and Due Process of Law

(1941); L. Henkin, Foreign Affairs and the Constitu-

tion 205-24 (1972). Treaties, under the Constitution, are

the supreme law of the land. U.S.Const. Art. IV. As

such, treaty provisions which create domestic law have the

same effect as legislation, and supersede previous con-

flicting legislation. By the same token, such provisions

are subject to the same substantive limitations as any

other legislation. Reid v. Covert, 354 U.S. at 16-18, 77

S.Ct. at 1230-1231. Were this not so, a constitutional

limitation on governmental power could be circumvented

by means of a treaty, although the same objective could

not be accomplished through legislation. Id.

Of course, statutes are entitled to a presumption of

constitutionality, Duke Power Co. v. Carolina Environ-

mental Study Group, 4388 U.S. 59, 83, 98 S.Ct. 2620,

2635, 57 L.Ed.2d 595 (1978); Usery v. Turner Elkhorn

Mining Co., 428 U.S. 1, 15, 96 S.Ct. 2882, 2892, 49

L.Ed.2d 752 (1976), and treaties are entitled to the same

deference. Furthermore, a court, in the process of review-

ing treaty provisions, must studiously avoid imposing its

own view ef-fereign policy objectives and must accept the

foreign policy formulations of the executive and legisla-

constitutional provisions the protection of which nonresident aliens

may not claim, see Johnson v. Eisentrager, 339 U.S. 763, 784-85,

70 S.Ct. 936, 946-47, 94 L.Ed. 1255 (1950), the fifth amendment

surely does not permit in a case such as this one, the application of

different rules of decision to residents and nonresidents suing on

the same cause of action in the same court.

23a

tive branches. See Narenji v. Civiletti, 617 F.2d 745,

748 (D.C.Cir.1979). Nonetheless, there are ends which

may not be accomplished either by statute or by treaty,

however compelling the foreign policy interests may be.

We conclude that the treaty at issue here must withstand

essentially the same tests as would domestic legislation

against a claim that it denies rights ~eenenmen by the

Constitution.

A. Plaintiffs’ Constitutional Arguments

Plaintiffs make three constitutional challenges to the

limitation: 1) that it is so arbitrary and unreasonable as

to deprive them of substantive due process; 2) that it de-

prives them of equal protection of the laws; and 3) that

it impermissibly burdens their constitutional right to

travel.

The first two arguments are very similar to those made

by the plaintiffs in Duke Power Co. v. Carolina Environ-

mental Study Group, 488 U.S. 59, 98 S.Ct. 2620, 57 L.Ed.

2d 595 (1978). That case dealt with the constitutionality

of the Price-Anderson Act, 42 U.S.C. § 2210 (1976),

which sets a limit on the maximum liability for injury

resulting from nuclear power plant accidents.

The plaintiffs in Duke Power claimed that the amount

of the limitation was arbitrary and unreasonable, depriv-

ing them of due process and equal protection. The Court

first held that the Prive-Anderson Act, as an economic

regulation under the Commerce Clause, would not violate

due process unless arbitrary or irrational. Jd. at 83, 98

S.Ct. at 2635. After reviewing the need for limitation of

liability, and examining the procedural provisions of the

Act, the Court concluded that it was not unconstitutional.

Id. at 86-87, 98 S.Ct. at 2637. We conclude that article

22 of the Warsaw Convention, like the Price-Anderson

Act, is an economic regulation which would be constitu-

tional under the Commerce Clause unless arbitrary or

unreasonable.

24a

Plaintiffs’ third argument is that the severe limitation

on recovery for wrongful death impermissibly burdens their

decedents’ right to travel. International travel, like inter-

state travel, is a fundamental right. Zemel v. Rusk, 381

USS. 1, 18-14, 85 S.Ct. 1271, 1279, 14 L.Ed.2d 179 (1965) ;

Aptheker v. Secretary of State, 378 U.S. 500, 505-06, 84

S.Ct. 1659, 1663-64, 12 L.Ed.2d 992 (1964) ; Kent v. Dul-

les, 357 U.S. 116, 126, 78 S.Ct. 1113, 1118, 2 L.Ed.2d 1204

(1958). Restrictions on international travel, therefore,

must be carefully tailored to serve a substantial and legit-

imate government interest. Aptheker, 378 U.S. at 507-08,

84 S.Ct. at 1664-65. The imposition of a penalty on the

exercise of the right to travel is the constitutional equiva-

lent of a direct restriction. See Shapiro v. Thompson, 394

U.S. 618, 641-42, 89 S.Ct. 1822, 13835, 22 L.Ed.2d 600

(1969). Although a right-to-travel challenge to the War-

saw Convention involves the assertion by survivors of

their decedents’ right to travel, this may be one of the

cases in which constitutional rights can be successfully

protected only if interested third parties are permitted

to raise them. See Griswold v. Connecticut, 381 U.S. 479,

481, 85 S.Ct. 1678, 1679, 14 L.Ed.2d 510 (1965). Surely

penalties that would be unconstitutional if imposed on the

traveller himself cannot be validly imposed on his sur-

vivors, simply because they were not the ones who

sought to exercise the right.

In support of their constitutional arguments, plaintiffs

allege the following facts. Plaintiffs assert that, what-

ever the need for limitation of airline liability might have

been in 1934, the need no longer exists and therefore can-

not support the treaty provisions before us. The airline

industry is no longer in its infancy. The fatality rate has

dropped from 45 per 100 million passenger miles in 1925,

to .55 per 100 million passenger miles in 1965. ICAO,

Annual Report (1965). The statistical materials assem-

bled for the proceedings leading up to the Montreal Agree-

ment suggest that the increased cost of insurance if the

25a

Warsaw limitation were removed would be insignificant.

See ICAO, 2 Special ICAO Meeting on Limits for Pas-

sengers Under the Warsaw Convention and the Hague

Protocol 72-173 (1966); Lowenfeld and Mendelsohn, 80

Harv.L.Rev. at 566-67. Furthermore, it appears that

the cost to airline of additional insurance would be less

than the cost to individual passengers of purchasing trip

insurance. See 1 L. Kreindler, Aviation Accident Law

§ 11.01[5] (1975); Lowenfeld and Mendelsohn, 80 Harv.

L.Rev. at 560-61. There is no allegation that domestic

airlines, which are not protected by the Warsaw Conven-

tion limitations or comparable legislation, have been un-

able to procure insurance. Similarly, no one contends that

the additional insurance, if required, would not be avail-

able. Compare Duke Power, 438 U.S. at 64, 98 S.Ct. at

2625 (potential liability beyond ability of private insur-

ance companies to absorb).

The United States responds that in negotiations over

the conditions of international air travel, concessions, par-

ticularly as to the limitation of liability, a.e necessary

to gain the cooperation of foreign countries. The United

States does not assert any national interest in limiting

liability per se. In fact, continuing efforts are being made

by the United States to raise or dispense with the limita-

tions altogether. See, Lowenfeld and Mendelsohn, 80 Harv.

L.Rev. 497 passim; 1 L. Kreindler, Aviation Accident

Law § 12B.01 (1980). z

Plaintiffs also argue that the supposed benefits of the

Warsaw Convention to some plaintiffs, e.g., the presump-

tion of liability and the venue provisions, are illusory and

do not constitute a guid pro quo for the liability limita-

tion. Compare Duke Power, 438 U.S. at 87-90, 98 S.Ct.

at 2637-2639. It has been persuasively argued that, for

U.S. plaintiffs at least, the Convention confers no pro-

cedural benefits in personal injury suits. See, e.g., Lowen-

feld and Mendelsohn, 80 Harv.L.Rev. at 516-32; 1 L.

Kreindler, Aviation Accident Law §11.01[5] (1980).

26a

The United States takes issue with this view, and argues

that the benefits to plaintiffs may in some cases be sig-

nificant.

We conclude that plaintiffs’ due process and right-to-

travel arguments, while substantial, would fail if another

remedy were available that would provide them with full

compensation. We find that such a remedy is available

under the Tucker Act, 28 U.S.C. § 1491, if the liability

limitation constitutes a “taking” under the fifth amend-

ment.

B. The Just Compensation Clause

No party to this litigation has argued that the Warsaw

Convention limitation constitutes a “taking” that entitles

plaintiffs to compensation by the United States under the

just compensation clause of the fifth amendment. We

raised this issue swa sponte and requested supplemental

briefs from the parties for the reason that, if compensa-

tion is available under the Tucker Act, 28 U.S.C. § 1491,

we do not reach the question of whether the Warsaw Con-

vention is unconstitutional.

We do not by this resolution imply that substantive

due process and just compensation are completely comple-

mentary protections.’ There are some government regu-

7TIt has been suggested that one who contests the constitutional-

ity of a law which deprives the claimant of some property interest

may not “sue in inverse condemnation and thereby transmute an

excessive use of the police power into a lawful taking for which

compensation in eminent domain must be paid.” Agins v. City of

Tiburon, 24 Cal.3d 266, 273, 598 P.2d 25, 28, 157 Cal. Rptr. 372,

375 (1979). This does not, however, appear to be the law. Four

justices of the Supreme Court have stated that “[t]his holding

flatly contradicts clear precedents of [the Supreme] Court.” San

Diego Gas & Electric Co. v. San Diego, 450 U.S. 621, 101 S.Ct.

1287, 1301, 67 L.Ed.2d 551 (1981) (Brennan, J., dissenting). At

least one other Justice has expressed agreement with this view.

Id. 101 S.Ct. at 1294 (Rehnquist, J., concurring). Justice Rehn-

quist agreed with the majority that the San Diego case was not

27a

lations for which no adequate compensation could be

paid, because they deprive persons of some aspect of life

or liberty. In these cases, the regulation may be a vio-

lation of substantive due process. See, e.g., Moore v. City

of East Cleveland, 431 U.S. 494, 500-06, 97 S.Ct. 1932,

1936-39, 52 L.Ed.2d 531 (1977); Roe v. Wade, 410 U.S.

113, 164, 93 S.Ct. 705, 732, 35 L.Ed.2d 147 (1978).

There are cases, however, in which both a deprivation of

substantive due process and a taking without just com-

pensation are claimed. See Penn Central Transportation

Co. v. New York City, 438 U.S. 104, 119, 98 S.Ct. 2646,

2656, 57 L.Ed.2d 631 (1978); Duke Power, 438 U.S. at

82, 94 n.39, 98 S.Ct. at 2635, 2641 n.39. Generally, if

the loss claimed is compensable, the regulation will not

be found unconstitutional. See Duke Power, 438 U.S. at

94 n.39, 98 S.Ct. at 2641 n.39. In Dames & Moore v.

Regan, 453 U.S. 654, 689-90, 101 S.Ct. 2972, 2992, 69

L.Ed.2d 918 (1981), the Supreme Court held that if the

executive agreement entered into with Iran to secure the

release of American hostages ever effected a taking of

the claimants’ property, the Tucker Act remedy would be

available. Justice Powell, concurring and dissenting,

appealable for lack of a final judgment, but observed that “I would

have little difficulty in agreeing with much of what is said in the

dissenting opinion” on the merits. Jd. Thus, we take it to be

the view of the majority of the Supreme Court that “[t]he general

rule at least is, that while property may be regulated to a certain

extent, if regulation goes too far it will be recognized as a taking.”

Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 415, 43 S.Ct. 158,

160, 67 L.Ed. 322 (1922) (quoted in San Diego Gas & Electric,

101 S.Ct. at 1302 (Brennan, J., dissenting) ). Thus, not withstand-

ing the view of the California Supreme Court, we assume that the

excessive exercise of the government’s law-making powers may

constitute a “taking” under the fifth amendment, for which just

compensation must be paid. See, e.g., Penn Central Transportation

Co. v. New York City, 488 U.S. 104, 122, 98 S.Ct. 2646, 2658, 57

L.Ed.2d 631 (1978); Goldblatt v. Town of Hempstead, 369 U.S.

590, 594, 82 S.Ct. 987, 990, 8 L.Ed.2d 130 (1962); United States

v. Central Eureka Mining Co., 357 U.S. 155, 168, 78 S.Ct. 1097,

1104, 2 L.Ed.2d 1228 (1958).

28a

noted that, “[t]he Government must pay just compensa-

tion when it furthers the nation’s foreign policy goals by

using as ‘bargaining chips’ claims lawfully held by rela-

tively few persons and subject to the jurisdiction of our

courts.” Jd., 101 S.Ct. at 2993. See generally, L. Henkin,

Foreign Affairs and the Constitution 259-66 (1972).

We first note that the “treaty exception” to the juris-

diction of the Court of Claims under the Tucker Act, 28

U.S.C. § 1502 (1976), is not a bar to suit by these

plaintiffs in the Court of Claims. See Dames & Moore,

453 U.S. at 689-90, 101 S.Ct. at 2992. The exception is

applicable only where the right asserted is created by

or depends for its existence upon some treaty provision.

That limitation has been narrowly construed. See

Hughes Aircraft Co. v. United States, 534 F.2d- 889,

902-06 (Ct. Cl. 1976). The right asserted by plaintiffs

here arises under California law, not treaty. The Court

of Claims would therefore have jurisdiction over any

claim of a “taking” of that right.

We next look to whether plaintiffs’ wrongful death

claims are “property” within the meaning of the just

compensation clause of the fifth amendment. Plaintiffs

have a right under California law to recover damages

caused by the wrongful death of their decedents.® There

is no question that claims for compensation are property

8It might be argued that if the Warsaw Convention creates a

cause of action, as at least one circuit has held, Benjamin v.

British European Airways, 572 F.2d 913, 918-19 (2d Cir. 1978),

the right asserted is “dependent upon” the treaty. But see Maugnie

v. Compagnie Nationale Air France, 549 F.2d 1256, 1258 n.2 (9th

Cir. 1977). However, the Convention has never been read to limit

plaintiffs to a cause of action arising thereunder, but rather to

limit the recovery in suits for injury. See Warsaw Convention,

supra note 1, at art. 24.

® The right to wrongful death recovery is also a feature of the

federal common law, Moragne v. States Marine Lines, 398 U.S.

375, 409, 90 S.Ct. 1772, 1792, 26 L.Ed.2d 339 (1970), and its

denial the exception, id. at 393, 90 S.Ct. at 1783.

29a

interests that cannot be taken for public use without

compensation. Ware v. Hylton, 3 U.S. (3 Dall.) 199,

245, 1 L.Ed. 568 (1796); Gray v. United States, 21

Ct.Cl. 340, 392-93 (1886). See also, Regional Rail Re-

organization Act Cases, 419 U.S. 102, 124-25, 95 S.Ct.

335, 349, 42 L.Ed.2d 320 (1974); Cities Service Co. v.

McGrath, 342 U.S. 330, 335-36, 72 S.Ct. 334, 337, 96

L.Ed. 59 (1952).%° We can see no reason why these

10 The Supreme Court, in a footnote to Duke Power, observed that

“la] person has no property, no vested interest, in any rule of the

common law.” 438 U.S. at 88 n.32, 98 S.Ct. at 2638 n.32 (quoting

Second Employers’ Liability Cases, 223 U.S. 1, 50, 32 S.Ct. 169,

175, 56 L.Ed. 327 (1912)). The cases cited for this proposition,

with one exception, dealt with statutes creating, not extinguishing,

liability. Silver v. Silver, 280 U.S. 117, 50 S.Ct. 57, 74 L.Ed. 221

(1929), the one exception, dealt with an automobile guest statute,

which barred liability. In that case, however, the due process ques-

tion was not raised, and the statement quoted is pure dictum.

Furthermore, we are not dealing here with a change in a rule of

the common law. Plaintiffs are not complaining of a change in law,

but of the limitation of an independently existing right under state

law. By the same token, plaintiffs in Dames & Moore and Duke

Power held or would hold claims created by the operation of state

law. The Constitution does not create property rights; it merely

forbids the extinguishment of those rights. The source of property

rights is necessarily common law or statute, usually state statute.

This is precisely the type of property to which the fifth amendment

is addressed, as the Supreme Court implicitly recognized in Duke

Power, 438 U.S. at 94 n.39, 98 S.Ct. at 2641 n.39.

The Court further observed that “statutes limiting liability are

relatively commonplace and have consistently been enforced by the

court.” Jd. at 88 n.32, 98 S.Ct. at 2638 n.32. The cases cited for

this proposition are most notable for their lack of authority. Silver

v. Silver, 280 U.S. 117, 50 S.Ct. 57, 75 L.Ed. 221, presented an

equal protection challenge to an automobile guest statute. Several

states have since decided that Silver is no longer good law, and

that guest statutes are unconstituional. E.g., Thompson v. Hagan,

96 Idaho 19, 523 P.2d 1365 (1974); Henry v. Bauder, 213 Kan. 751,

518 P.2d 362 (1974); Laakonen v. Eighth Judicial District Court,

91 Nev. 506, 588 P.2d 574 (1975); McGeehan v. Bunch, 88 N.M.

308, 540 P.2d 238 (1975). Providence & New York S.S. Co. v.

Hill Mfg. Co., 109 U.S. 578, 3 S.Ct. 379, 27 L.Ed. 1038 (1883)

involved no constitutional challenge to the limitation of a vessel

30a

plaintiffs’ claims are any different, for fifth amendment

purposes, from the claims of various creditors against the

government of Iran, see Dames & Moore, 453 U.S. at

689, 101 S.Ct. at 2992.

Of course, whether or not a particular limitation

amounts to a taking is a difficult question. “Takings”

cases frequently turn on questions of degree. See, ¢.g.,

Penn Central Transportation Co. v. New York City, 438

U.S. 104, 98 S.Ct. 2646, 57 L.Ed.2d 631 (1978) ; United

States v. Causby, 328 U.S. 256, 258, 66 S.Ct. 1062,

1064, 90 L.Ed 1206 (1946). We need not decide now .

whether the Warsaw Convention may effect a taking,

because the issue may not arise in this case. The ques-

tion is properly one for the Court of Claims, when and

if the Warsaw Convention limitation is applied to these

plaintiffs. See Regional Rail Reorganization Act Cases,

419 U.S. 102, 146-47, 95 S.Ct. 335, 359-60, 42 L.Ed.2d

320 (1974). Although the value of plaintiffs’ claims

against Pan Am has been established,"’ it has yet to be

determined whether the impairment of that claim by the

Warsaw Convention would constitute a taking. We hold

only (1) that plaintiffs have a right to compensation if

their claims have been unreasonably impaired by the

treaty, and (2) that the Court of Claims has jurisdiction

to make that determination and to enforce the right.”

owner’s liability, and the court noted that the limitation dated

from “time immemorial.” Jd. at 593, 3 S.Ct. at 388. Indemnity

Ins. Co. of North America v. Pan American Airways, 58 F.Supp.

338 (S.D.N.Y. 1944), involved a due process challenge to the

Warsaw Convention, that was rejected in a single sentence.

11 We note that the right to just compensation entitles the claim-

ant to the- full pecuniary value of his claim. United States v.

Reynolds, 397 U.S. 14, 15-16, 90 S.Ct. 803, 804-805, 25 L.Ed.2d 12

(1970). Plaintiffs’ damages have already been determined by the

jury, so the value of their claim is not an issue.

12'There is no danger that the statute of limitations will have

run before plaintiffs can bring a suit in the Court of Claims,

because no taking will have occurred until the Warsaw limitation

is applied to them, if it ever is.

3la

TRIAL ERRORS

Because we cannot uphold the district court’s judg-

ment, the case must be remanded for further proceedings.

On remand, Pan Am will be required to prove ticket

delivery and adequate notice before the Warsaw limita-

tion could be applied.'* Additionally, plaintiffs urge on

their cross-appeal that the district court erred in not

admitting certain training records of the aircraft’s pilot,

and in not allowing plaintiffs’ expert to testify as to the

pilot’s competence and as to whether Pan Am was negli-

gent in allowing the pilot to command the flight in ques-

tion.- Plaintiffs argue that these errors entitle them to

a new trial on the issue of willful misconduct.

We agree that the court’s evidentiary rulings were

erroneous and reversible because the excluded evidence

could have provided the jury with a basis to find Pan Am

guilty of willful misconduct. A verdict of willful mis-

conduct would render the Warsaw Convention limitations

inapplicable.

18 We note that adequate notice to the passenger requires de-

livery of a ticket to him “in such a manner as to afford him a

reasonable opportunity to take self-protective measures.” Mertens

». Flying Tiger Line, 341 F.2d 851, 857 (2d Cir.), cert. denied,

382 U.S. 816, 86 S.Ct. 38, 15 L.Ed.2d 64 (1965). See also Warren

v. Flying Tiger Line, 352 F.2d 494, 498 (9th Cir. 1965). Incon-

spicuous and hypertechnical “notice” may not satisfy this require-

ment. See Lisi v. Alitalia-Linee Aeree Italiane, 370 F.2d 508, 512-

14 (2d Cir. 1966). The current notice required by the CAB informs

passengers that recovery “is limited in most cases to proven dam-

ages not to exceed U.S. $75,000 per passenger .. .” on trips having

an “agreed stopping place in the United States of America,” or

“in most cases to approximately U.S. $10,000 or U.S. $20,000” on

other international trips. CAB Form 263 (Jan. —, 1976). We

need not decide here whether the notice required by the CAB is

adequate to advise a passenger of the effect of the limitation.

What notice was actually given and the manner of its display on

tickets is not in the record before us.

32a

A. Exclusion of Evidence

Plaintiffs sought to prove that Pan Am was negligent

in entrusting the aircraft to pilot Zinke because Pan Am

knew that Zinke was incompetent and on prior occasions

had made errors similar to the error that caused the Bali

aircrash. As proof, plaintiffs offered pilot Zinke’s train-

ing records both as independent evidence and as the basis

for the opinion of their expert, Captain Cusmano, that

the pilot was incompetent and should not have been

allowed to fly the flight in question. Captain Cusmano

was permitted to give his opinion as to the cause of the

accident based on the events immediately preceding the

accident, but he was not permitted to testify about

Zinke’s competence in general or as to what Pan Am’s

conduct in light of his incompetence should have been.

Plaintiffs intended to rely primarily on the excluded evi-

dence to show willful misconduct on the part of Pan Am.

The trial court excluded the proffered evidence on sev-

eral grounds: 1) that the theory of negligent entrust-

ment had not been raised in the pleadings or preserved

in the pretrial order; 2) that the records were too old

to be relevant; and 3) that they were improper evidence

of habit or custom.

A trial court has broad discretion to admit or exelude

evidence, and we review its decision only for abuse of

that discretion. Campbell Industries v. M/V Gemini, 619

F.2d 24, 27 (9th Cir. 1980). Even if there is error,

reversal is appropriate only if we can say that the error

affected the substantial rights of the parties. Fed.R.Civ.

P. 61; International Merger and Acquisition Consultants,

Inc. v. Armac Enterprises, Inc., 531 F.2d 821, 823 (7th

Cir. 1976).

First, we do not agree that plaintiffs’ theory of negli-

gence was “new.” Defendants argue that they were un-

fairly surprised by the theory because it was not raised

in the pleadings, and that the plaintiffs are precluded

33a

from relying on it because it was not comprehended in

the pretrial order.

As to the complaint, all that is required is specificity

adequate to give notice to the defendant. Fed.R.Civ.P.

8(a); Trixler Brokerage Co. v. Ralston Purina Co., 505

F.2d 1045, 1050 (9th Cir. 1974); Ross Island Sand &

Gravel Co. v. General Insurance Co., 472 F.2d 750, 752

(9th Cir. 1973). The complaint alleges negligence in

landing on the part of the crew, and negligence on the

part of Pan Am, its agents and employees. Furthermore,

Pan Am provided plaintiffs with pilot Zinke’s training

records during discovery and the records were attached

to the pretrial order, to be admitted “without objection

save as to relevance.” Prior to trial, Pan Am deposed

plaintiff’s expert, Captain Cusmano. In his deposition,

Cusmano stated that, based on the training record, he

considered Zinke incompetent. We find that Pan Am

had adequate notice that plaintiffs would seek to prove

that Pan Am was negligent in allowing pilot Zinke to

fly."

As to the pretrial order, Pan Am’s argument turns on

the meaning of the language in “Plaintiffs’ Contentions.”

The relevant portion reads:

Plaintiffs contend that Pan Am and the decedent

pilots willfully breached their duty to the passenger

plaintiffs in the following particulars:

14 The trial court conceded that such an interpretation was

possible, but that it was also possible to read the complaint as

alleging only a theory of respondeat superior. Complaints are of

necessity framed in general terms, and if both readings were

possible, plaintiffs should have been allowed to pursue both theories.

Fed.R.Civ.P. 8(a), (f); Conley v. Gibson, 355 U.S. 41, 47-48, 78

S.Ct. 99, 102-103, 2 L.Ed.2d 80 (1957); Trialer Brokerage Co. v.

Ralston Purina Co., 505 F.2d 1045, 1050 (9th Cir. 1974); Janke

Const. Co. v. Vulcan Materials Co., 527 F.2d 772, 776-77 (7th Cir.

1976).

34a

(1) that all crew members were qualified and com-

_petent to conduct the flight of April 22, 1974, desig-

nated Flight 812.

A fair reading of the order as a whole leaves the clear

impression that plaintiffs were contending that Pan Am

failed to ensure that all crew members were qualified

and competent. There is no other reasonable explanation

for the paragraph appearing under “Contentions,” rather

than under “Admitted Facts.” Furthermore, many of

plaintiffs’ other contentions’ concern negligence and mis-

conduct on the part of the crew. It is impossible to read

these paragraphs consistently with a contention that the

erew was competent. Furthermore, pilot Zinke’s training

records were attached to the order as plaintiffs’ exhibits

and listed in the order. Pan Am was not misled into

believing that the plaintiffs conceded the issue of pilot

competence. Accordingly, we find that neither the plead-

ings nor the pretrial order preclude plaintiffs from pre-

senting evidence of negligent entrustment.

The trial court also held that the records were too old

to be relevant, and that they were inadmissible evidence

of habit or custom. We disagree.

The records were the continuous training records of pilot

Zinke maintained by Pan Am from 1965 until the date of

the fatal accident. Plaintiffs offered to prove, through

their expert, that Zinke had demonstrated certain inade-

quacies as a pilot on several prior occasions, and that,

in the opinion of their expert, Pan Am should not have

allowed Zinke to pilot the flight in question. This testi-

mony would certainly have been relevant, and for this

purpose the records themselves need not be independently

admissible. Rule 703 of the Federal Rules of Evidence

permits an expert to base an opinion on any facts or data,

admissible or not, which are “of a type reasonably relied

on by experts in the particular field in forming opinions

or inferences upon the subject.” As long as plaintiffs can

35a

establish that the training records fall into this category,

they are entitled to have their expert give an opinion

based on them. Bauman v. Centex Corp., 611 F.2d 1115,

1120 (5th Cir. 1980); see United States v. Featherston,

325 F.2d 539, 542-43 (10th Cir. 1963). The trial court’s

failure to allow Captain Cusmano to testify as to his

opinion of Zinke’s competence, based on his training rec-

ords, was error.

Furthermore, the records were not inadmissible because

they did not meet the standard for evidence of habit or

custom. Plaintiffs offered the evidence on two alternate

theories. First, the records were offered to show that

because pilot Zinke had made similar mistakes on prior

occasions, he was likely to have made a mistake on this

occasion. For this purpose they may have been inadmis-

sible, as the trial court ruled. See Fed.R.Evid. 404.

However, they were also offered to show that Pan Am

had notice of Zinke’s alleged incompetence, and that it

should not have allowed him to fly. For this purpose

they are relevant and admissible. See Advisory Commit-

tees Notes, Fed.R.Evid. 404 (“. . . the competency of the

driver in an action for negligently entrusting a motor

vehicle to an incompetent driver [does not involve the]

problem of the general relevancy of character evidence,

and the present rule therefore has no provision on the

subject.”); Breeding v. Massey, 278 F.2d 171, 181

(8th Cir. 1967) ; 2 Weinstein’s Evidence {] 404[20]. The

training records themselves are admissible hearsay under

Fed.R.Evid. 803(6) because they are “kept in the course

of a regularly conducted business activity.” This is not

disputed. The trial court was concerned, however, that

portions of the records might be double or triple hear-

say, and that some might be too old to be relevant. It

is open to the trial court on remand to exclude any por-

tion of the records that is inadmissible hearsay, Fed.R.

Evid. 802, or that is more prejudicial than probative,

Fed.R.Evid. 403.

36a

We must conclude that, because the evidence was cen-

tral to plaintiffs’ case, and the legal objections to it were

not well-taken, it was an abuse of discretion for the

judge not to permit plaintiffs’ expert to testify on the

issue of pilot competence and Pan Am’s negligent entrust-

ment, and to exclude all of the pilot’s training records.

Plaintiffs proffer an alternate theory for admission of

the evidence, which we think has merit. Pan Am’s expert

Baggott was permitted to testify that all of Pan Am’s

pilots, and Zinke in particular, were competent. He was

also permitted to testify regarding the role of training

records in the investigation of an accident, and was cross-

examined regarding pilot competence generally. Plain-

tiffs argue that evidence of Zinke’s incompetence is there-

fore admissible as rebuttal testimony. If Zinke’s com-

petence had not been at issue before, Pan Am put it

in issue through the testimony of its own expert.”

For the reasons stated, the judgment of the trial court

must be reversed and the case remanded for a new trial

on the issue of willful misconduct.”

B. Punitive Damages

Plaintiffs contend that they should have been permitted

to amend their complaint to state a claim for punitive

damages. However, during the pendency of this appeal,

this court held that California law does not permit puni-

tive damages in wrongful death actions, and that this is

not a denial of equal protection. In re Paris Aircrash of

March 3, 1974, 622 F.2d 1815, 1819-20 (9th Cir. 1980).

See also, Georgie Boy Mfg., Inc. v. Superior Court, 115

Cal.App.3d 217, 171 Cal.Rptr. 382 (1981) (denial of

15 Baggot’s testimony-also belies Pan Am’s contention that it

was not prepared to counter evidence of Zinke’s incompetence.

16Pan Am contends that the trial judge should have recused

himself because of bias or prejudice against Pan Am. Pan Am

has identified no prejudice to their case thus far resulting from

an unsubstantial allegation of bias.

i},

37a

punitive damages in wrongful death action not violative

of state constitution). The trial court was therefore cor-

rect in not permitting plaintiffs to amend their complaint.

CONCLUSION

We hold that evidentiary errors mandate a new trial

on the issue of willful misconduct.'’ We further hold that

the Court of Claims is the proper forum in which to

litigate the yuestion of taking if that should become

necessary.® 28 U.S.C. § 1491.

REVERSED and REMANDED for further proceed-

ings consistent with this opinion.

17 There need be no new trial on damages.

18 We need not face here the novel question of whether plaintiffs

might proceed directly to the Court of Claims without first retrying

the willful misconduct claim in district court. We suggest only

that a taking might not have occurred where plaintiffs have avail-

able remedies against a private wrongdoer that have not been

exhausted.

38a

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

No. 86-6453

D.C. No. CV-75-1364-DWW

IN RE: AIRCRASH IN BALI, INDONESIA.

JOHN P. CAUSEY, JR., individually and as Executor of the

Estate of JOHN P. CAUSEY, SR., and as Administrator

with will annexed of the Estate of VIRGINIA D. CAUSEY,

et al.,

Plaintiffs-A ppellees,

LEE B. ZINKE, et al.,

Defendants,

and

PAN AMERICAN WORLD AIRWAYS, INC.,

Defendant-Appellant.

ORDER

| Filed June 21, 1989]

Before: FLETCHER, PREGERSON, and LEAVY, Cir-

cuit Judges.

The panel as constituted in the above case has voted to

deny the petition for rehearing.

The full court has been advised of the suggestion for

rehearing en banc and no judge of the court has requested

a vote on it. Fed. R. App. P. 35(b).

The petition for rehearing is denied and the suggestion

for rehearing en banc is rejected.

39a

UNITED STATES DISTRICT COURT

C. D. CALIFORNIA

M.D.L. No. 215 -

Nos. CV 75-1364-DWW, CV 76-1120-DWW and

CV 75-3293-DWW

IN RE AIR CRASH IN BALI, INDONESIA.

JOHN P. CAUSEY, JR., Individually and as Executor of the

Estate of JOHN P. CAUSEY, SR., and as Administrator

with Will Annexed of Estate of Virginia D. Midgett

Causey, Plaintiffs,

Vv.

PAN AMERICAN WORLD AIRWAYS, INC., a New Yor): Corp.,

Defendant.

MARGARET G. JOHNS as Guardian ad Litem of JOHN

TRELOAR RYDER, SARAH JANE RYDER and SIMON BRUCE

RYDER, minors, Plaintiffs,

Vv.

PAN AMERICAN WORLD AIRWAYS, INC., a New York Corp.,

Defendant.

SIMONE RYDER, Individually and as heir of

JOHN WILLSON RYDER, Deceased,

Plaintiff,

Vv.

PAN AMERICAN WORLD AIRWAYS, INC.,

Defendant.

Oct. 27, 1978

40a

A. George Glasco, Los Angeles, Cal., James G. Butler,

Butler, Jefferson & Dan, Los Angeles, Cal., for plaintiffs

on behalf of the heirs and next of kin of John Willson

Ryder (deceased).

Mark D. Robinson, Horgan & Robinson, Los Angeles,

Cal., for plaintiffs on behalf of the heirs and next of kin

of John Paul Causey and Virginia D. Midgett Causey

(deceased).

Daniel W. Winters, Philip L. Johnson, Tucker & Cod-

dington, Los Angeles, Cal., for defendant Pan American

World Airways, Inc.

MEMORANDUM

DAVID W. WILLIAMS, District Judge.

On April 22, 1974 a Boeing 707 aircraft operated by

Pan American World Airways as Flight 812 was headed

from Hong Kong to the island of Bali, Indonesia, intend-

ing to land at Den Passar Airport, located at the island’s

southern tip. In darkness it began its descent and land-

ing approach, but became lost. Instead of retracing its

path and climbing higher, the crew kept the craft at an

inordinately low altitude for too long a period. The

plane crashed into a mountain located 37 miles north of

the airport, killing all 96 passengers and the 11 crew

members.

Numerous lawsuits were filed in several federal dis-

tricts of the United States, and the Multidistrict Litiga-

tion Panel ordered all the suits transferred to the Central

District of California for pretrial supervision. At this

writing, most of the suits have been settled.

Wrongful death actions on behalf of the survivors of

three of the passengers, John and Virginia Causey and

John W. Ryder, were tried to a jury. The tria! was

bifurcated so that claims of the applicability of the War-

Ala

saw Convention’ and its progeny * and the defenses aris-

ing from a contract of carriage, all having the effect of

a limitation of damages, would be deferred until after

the jury’s damage verdict. This court earlier decided

that, under the choice of law rules that should prevail,

this action was governed by the wrongful death law of

California.* The jury determined the accident was caused

by the negligence, but not the wilful misconduct, of the

defendant and that the Causey kin should receive total

damages of $300,000 and the Ryder plaintiffs the sum of

$651,500. A finding of wilful misconduct, under Article

25 of the Warsaw Convention,‘ prevents an air carrier

from availing itself of any other provisions of the Con-

vention which exclude or limit liability. Because tuere

was no such finding, an issue remained as to the applica-

bility of any liability limitation found in the Warsaw

Convention and its progeny.

Following the jury verdict, plaintiffs moved this court

to exclude all evidence concerning the contest of the con-

tract of carriage between the airline and the passengers,

as well as evidence of the applicability of the Warsaw

1 Warsaw Convention, October 12, 1929, 49 Stat. 3000 (1934),

137 L.N.T.S. 11 (1929).

2 Hague Protocol, September 28, 1955, 478 U.N.T.S. 371; Mon-

treal Agreement, CAB Order No. E-23680, Vol. 31, No. 97 Fed.Reg. -

7302 (May 19, 1966), approving Agreement CAB 18,900.

3 Cal.Code Civ.Pro. § 377.

4 Article 25 provides: :

(1) The carrier shall not be entitled to avail himself of the

provisions of this convention which exclude or limit his liability,

if the damage is caused by his wilful misconduct or by such de-

fault on his part as, in accordance with the law of the court to

which the case is submitted, is considered to be equivalent to wilful

misconduct.

(2) Similarly the carrier shall not be entitled to avail himself

of the said provisions, if the damage is caused under the same

circumstances by any egent of the carrier acting within the scope

of his employment.

42a

Convention on the grounds that such evidence was ir-

relevant and immaterial to the issues of these cases. Pan

American opposed these motions. After a consideration of

the moving and opposing papers and substantial oral

argument, the court concludes:

1) The California wrongful death statute under which

plaintiffs bring their case provides survivors with an in-

dependent cause of action arising upon the decedents’

death and derived in no way from any cause of action

belonging to the decedent.

2) Such cause of action is unaffected by any contract

made by the decedents.

3) The Warsaw Convention, the Hague Protocol, and

the Montreal Agreement provide air carriers with a basis

contractually to limit liability. Air carriers may avail

themselves of the limitation only if there is a contractual

acceptance of the liability limitation, either actual or

legal, by the party against whom the limitation is sought

to be imposed.

4) The Warsaw Convention and its progeny do not

limit an air carrier’s liability with respect to the sur-

vivors’ California wrongful death action.

5) Any evidence concerning the actual and legal de-

livery of a passenger ticket to the decedents, including

physical delivery, timeliness of delivery, type size, and

contents, is therefore irrelevant and immaterial to any

issue before either the jury or the Court.

6) The plaintiffs’ motions to exclude evidence on the

Warsaw Convention and its progeny is granted.

I. THE CALIFORNIA WRONGFUL DEATH ACTION

It is a settled California rule that its wrongful death

statute creates an original cause of action not derived

from any rights the decedent may have had. Earley v.

43a

Pacific Electric Ry. Co., 176 Cal. 79 at 81, 167 P. 5138

(1917); Burk v. Arcata & Mad River R.R. Co., 125 Cal.

364 at 367, 57 P. 1065 (1899); Munro v. Pacific Coast

Dredging Co., 84 Cal. 515 at 524, 24 P. 303 (1890);

Marks v. Reissinger, 35 Cal.App. 44 at 58, 169 P. 243

(1817). It vests in certain heirs upon the decedent’s

death. Earley, 176 Cal. at 81, 167 P. 513; Burk, 125

Cal. at 367, 57 P. 1065; Marks, 35 Cal.App. at 51, 169

P. 243. It has its own measure of damages. Earley, 176

Cal. at 81, 167 P. 518; Burk, 125 Cal. at 368, 57 P.

1065; Marks, 35 Cal.App. at 51, 169 P. 248; see Black-

weli v. American Film Co., 189 Cal. 689 at 694, 209 P.

999 (1922). Because of the separate and original nature

of this wrongful death action, a decedent, while he is

alive, cannot contract away or compromise the wrongful

death cause of action, nor effectively release from wrong-

ful death liability a potential defendant. Earley, 176

Cal. at 79, 167 P. 518; Marks, 35 Cal.App. at 54, 169

P. 243. See Blackwell, 189 Cal. at 693, 209 P. 999. In

Marks, the court squarely held that heirs seeking to re-

cover in a wrongful death action cannot be defeated or

affected by anything that the deceased could have said or

done. In oral argument, defendant’s counsel conceded the

correctness of this interpretation of California law. Be-

cause, then, the cause is a new right of action independent

of any right the decedent may have, and because it cannot

be waived by the decedent or otherwise affected by de-

cedent’s contracting during life, any contract of carriage

pursuant to which a decedent purports to limit the right

to recover for his death therefore cannot affect this cause

of action. If the issue before this court were simply a

liability limitation in a contract of carriage entered into

by a decedent, then it is clear that such limitation would

have no effect in a California wrongful death action.

The question remains whether in the instant case the

Warsaw Convention, 49 Stat. 3000 (1934) dictates a

different result.

44a

Il. THE WARSAW CONVENTION

A. History.’

The Warsaw Convention was the result of two interna-

tional conferences held in Paris in 1925 and Warsaw in

1929. The purpose of the conference was twofold. First,

since aviation was obviously going to link many lands

with different languages, customs and legal systems, it

would be desirable to establish a certain degree of uni-

formity. The convention achieved this almost completely

as to documentation—tickets, waybills and the like. The

second goal was to limit the potential liability of the car-

rier in case of accidents. The convention provided that

carriers were liable for damages sustained by a passenger

in the course of a flight or while embarking or disem-

barking, but limited this liability to 120,000 Poincairé

francs—approximately 8300 U.S. dollars.° One of the

bargains contained in the convention was that while re-

taining a limitation of liability, the convention shifted

the burden of proof so that the carrier was presumed

liable unless it could show that it had taken all necessary

measures to avoid damages or that it was impossible for

it to take such measures.’

The United States was not a party to the two interna-

tional conferences in 1925 and 1929 which led to the

Warsaw Convention, and only sent an observer. Five

High Contracting parties deposited their ratifications to

the original convention, and by the end of 1933 twelve

countries were members. This did not include the United

States. In November of 1933 the Commerce Department

5 See Lowenfeld and Mendelsohn, The United States and the

Warsaw Convention, 80 Harv.L.R. 497 (1967).

6 This dollar equivalent has prevailed since the 1933 devaluation

of the dollar.

7 Article 20. The Montreal Agreement imposes absolute liability

up to $75,000.

OS a ee way eee? f' finss

45a

- and the State Department realized the utility of the

United States becoming a party to the convention and

the Secretary of State recommended to President Roose-

velt its approval of the treaty.

Article 38 of the Convention provides:

“(1) This convention shall, after it has come into

force, remain open for adherence by any state.

(2) The adherence shall be effected by a notification

addressed to the Government of the Republic of Po-

land, which shall inform the Government of each of

the High Contracting Parties thereof.

(8) The adherence shall take effect as from the 90th

day after the notification made to the Government

of the Republic of Poland.”

President Roosevelt submitted the Treaty to the Senate

and on June 15, 1934, the Senate gave its advice and con-

sent by voice vote. The United States deposited its in-

strument of adherence on July 31, 1934 and the Presi-

dent proclaimed the Treaty 90 days later.®° Thus, the

United States had nothing to do with formulation of the

convention and did not ratify it but adhered to it shortly

after it went into effect, pursuant to Article 38.

A diplomatic conference was convened at the Hayue in

September, 1955 to consider, (a) the problem of raising

the limits of liability over the prevailing $8300 ceiling,

and (b) the clarification or modification of the conven-

tion’s Article 25, under which there were no limits of lia-

bility if a plaintiff could successfully establish that the

accident was caused by “wilful misconduct.” It was pro-

posed to raise the limits of liability to $13,300. The

United States tried to get the limits raised to $25,000

8 78 Cong.Rec. 11,582 (1934).

® 49 Stat. 3000.

46a

and after a great deal of argument it was agreed to raise

the limits of liability to $16,600, exactly double the War-

saw sum. In addition, Article 25’s language was modified.

The Hague Protocol prepared by the conference embodied

these provisions.

For several years thereafter, little effort was made in

the United States towards ratification of the Hague Pro-

tocol, which did not satisfy the opponents of the Warsaw

Convention’s liability provision. Increasing dissatisfac-

tion in the United States and by the United States gov-

ernment with the Warsaw Convention’s liability limita-

tion had already led to modification proposals in the

Hague Conference of 1955. As another attempt to modify

the limitation, the Kennedy-Johnson Administration in-

troduced domestic legislation, under which air carriers

would be required to insure passengers at a higher level.

Airline opposition to the compulsory insurance scheme led

to the executive branch decision to denounce the Warsaw

Convention on November 15, 1965, effective six months

later, on May 15, 1966. On the same date that the formal

notice of denunciation was deposited by the United States,

the Department of State issued 2 press release which

stated :

“The United States would be prepared to with-

draw the notice of denunciation deposited today if

prior to its effective date of May 15, 1966, there is

a reasonable prospect of.an international agreement

on limits of liability in international air transporta-

tion in the area of $100,000 per passenger or on uni-

form rules but without any limit of liability, and if,

pending the effectiveness of such international agree-

ment, there is a provisional arrangement among the

principal international airlines waiving the limits of

liability up to $75,000 per passenger.”

1° 50 Dep’t State Bull 923 at 924 (1965).

47a

Under the impetus of the United States’ dissatisfac-

tion and of its denunciation of the treaty, the Interna-

tional Civil Aviation Organization, of which the United

States is a member, met in Montreal in February, 1966,

to work out a new liability limitation. The Montreal Con-

ference ended with inconclusive results. As the effective

date of the United States’ denunciation neared, air car-

riers both United States and foreign reconsidered interim

measures they had found unacceptable earlier. The car-

riers agreed to accept a system under which they were

subject to a liability limitation of $75,000, without re-

gard to fault on the part of the carrier."' The United

States government, as a result of this acceptance by the

carriers, withdrew its denunciation of the Warsaw Con-

vention. The Montreal Agreement is the term used for

the liability system that emerged out of these events of

1965 and 1966. Dunn v. Trans World Airlines, Inc., 589

F.2d 408 at 410 (9th Cir. 1978).

B. The Limitation of Liability

Counsel argued the nature of the liability limitation

in the Warsaw Convention and its progeny, the Hague

Protocol, and the Montreal Agreement. Defendant’s con-

tention is that: 1) the Warsaw Convention is a treaty

made under the authority of the United States and is

therefore the supreme law of the land; and 2) the con-

ventions expressly deal with the issue before this Court,

and limit liability. Defendant cites in particular Article

22. Plaintiffs respond that the Warsaw Convention, by

its terms, is applicable only to a contractual relationship

which may exist between passengers_and carriers; and

that the Convention and its progeny read in their entirety

merely provide a mechanism by which air carriers may

limit their liability stemming from a contract of car-

11 For further discussion of this system and the basis of its

legal authority, see Section II(B) (3) infra.

48a

riage, citing Article 1(2). Plaintiffs assert that the lia-

bility limitation is based upon contractual principles,

citing Block v. Compagnie Nationale Air France, 229

F.Supp. 801, 811 (N.D.Ga.1964), and arguing their in-

terpretation is consonant with the treaty’s notice require-

ments.

The plaintiffs’ argument on the general contractual

nature of the liability limitation is persuasive, in light of

the Warsaw Convention’s text, case law, the Montreal

Agreement and the circumstances surrounding it, and

today’s federal public policy towards air carriers.

1. Text:

In addition to Article 1(2), the provisions of Article

3 underline the contractual basis of the liability limita-

tion. Article 3(1) requires that a ticket state that the

transportation is subject to the convention’s liability rule,

while Section (2) provides that a carrier must deliver a

passenger ticket to a passenger if it is to avail itself of

the convention’s liability limitations. Article 22’s liability

limitation, including its own reference to the parties’

ability to contract specially, is ambiguous when read in

the light of the above-mentioned articles. It is clear that

there is some relationship between the liability limitation,

the passenger ticket and contract. It is unclear precisely

what that relationship is. These articles should be con-

strued, if practicable, so that they support and explain

each other. Bernier v. Bernier, 147 U.S. 242, 13 S.Ct.

244, 37 L.Ed. 152 at 154 (1893). In order logically to

reconcile these provisions, this court concludes that the

liability limitation in Article 22 is one based upon con-

tract between the parties to the contract of carriage. In

order for the liability limitation to be effective, there

must be a contractual acceptance, either actual or legal,

of the limitation by the party against whom the limita-

tion is sought to be imposed. Such an interpretation has

the effect in this case of not limiting plaintiffs’ recovery,

A a renee are

49a

given the nature of the California wrongful death cause

of action.'”

12 The court finds the following Articles of Warsaw, inter alia,

relevant to the question of the nature of the convention’s liability

limitation: (italics by the court) :

Article 1

(1) This convention shall apply to all international trans-

portation of persons, baggage, or goods performed by aircraft

for hire. It shall apply equally to gratuitous transportation by

aircraft performed by an air transportation enterprise.

(2) For the purposes of this convention the expression “in-

ternational transportation” shall mean any transportation in

which, according to the contract made by the parties, the place

of departure and the place of destination, whether or not there

be a break in the transportation or a transshipment, are situ-

ated either within the territories of two High Contracting

Parties, or within the territory of a single High Contracting

Party, if there is an agreed stopping place within a territory

subject to the sovereignty, suzerainty, mandate or authority of

another power, even though that power is not a party to this

convention. Transportation without such an agreed stopping

place between territories subject to the sovereignty, suzerainty,

mandate, or authority of the same High Contracting Party

shall not be deemed to be international for the purposes of

this convention.

(3) Transportation to be performed by several successive

air carriers shall be deemed, for the purposes of this con-

vention, to be one undivided transportation, if it has been

regarded by the parties as a single operation, whether it has

been agreed upon under the form of a single contract or of a

series of contracts, and it shall not lose its international

character merely because one contract or a series of contracts

is to be performed entirely within a territory subject to the

sovereignty, suzerainty, mandate, or authority of the same

High Contracting Party.

Article 3

(1) For the transportation of passengers the carrier must

deliver a passenger ticket which shall contain the folloing par-

ticulars:

(a) The place and date of issue;

(b) The place of departure and of destination;

50a

2. Case Law:

Plaintiffs’ citation to Block v. Compagnie Nationale Air

France, 229 F.Supp. 801, 811 (N.D.Ga.1964) is apposite.

The case is authority for the proposition that the conven-

tion gives air carriers permission to contract for limited

liability, and by implication requires that the limitation,

at least indirectly, be contractually based.

Great support is shown for the contractual basis of the

liability limitation, particularly in light of recent cases.

In Glenn et al. v. Compania Cubana de Aviacion, S.A.,

et al., 102 F.Supp. 631 (S.D.Fla.1952), Chief Judge Hol-

land held that the Warsaw Convention was applicable in

the wrongful death action before him, because the con-

vention was designed to regulate “the rights and liabilities

may reserve the right to alter the stopping places in case of

necessity, and that if he exercises that right, the alterration

shall not have the effect of depriving the transportation of

its international character;

(d) The name and address of the carrier or carriers;

(e) A statement that the transportation is subject to the

rules relating to liability established by this convention.

(2) The absence, irregularity, or loss of the passenger ticket

shall not affect the existence or the validity of the contract of

transportation, which shall none the less be subject to the rules

of this convention. Nevertheless; if the carrier accepts a pas-

senger without a passenger ticket having been delivered he

shall not be entitled to avail himself of those provisions of

this convention which exclude or limit his liability.

Article 22

(1) In the transportation of passengers the liability of the

carrier for each passenger shall be limited to the sum of

125,000 francs. Where, in accordance with the law of the

court to which the case is submitted, damages may be awarded

in the form of periodical payments, the equivalent capital

value of the said payments shall not exceed 125,000 francs.

Nevertheless, by special contract, the carrier and the passenger

may agree to a higher limit of liability.

OO , ae dle ree

5la

of parties to international carriage contracts by air...”

Id. at 633. It is now apparent that the threshold ques-

tion of the convention’s applicability depends upon the

contract between the parties, and that the contract is

expressed by the passenger ticket, e.g., Kelley v. Sabena

Belgian World Airlines, 242 F.Supp. 129 (E.D.N.Y.

1965); Burdell v. Canadian Pac. Airlines, Ltd., 11 Av.

Cas. 17,251 (Ill.Cir.1969); Galli v. Re-Al Brazilian In-

ternational Airlines, 29 Mise.2d 499, 211 N.Y.S.2d 208

(Sup.Ct. Queens Cty. 1961); Straton v. Trans Canada

Air Lines, 7 Av.Cas. 17,724 (British Columbia, 1961) ;

Egan v. Kollsman Instrument Corp., 44 Mise.2d 348, 253

N.Y.S.2d 679 (1964), aff'd on rehearing on newly dis-

covered evidence, 47 Mise.2d. 871, 263 N.Y.S.2d 398

(1965), aff'd 26 A.D.2d 633, 272 N.Y.S.2d 563 (App.

Div. 1966), rev’d on other grounds 21 N.Y.2d 160, 287

N.Y.S.2d 14, 234 N.E.2d 199 (Ct. App.) (1967) (re-

versing on grounds that notice on ticket was inadequate).

Today’s courts treat the airline passenger ticket, absent

effective notice of liability limitations, as a contract of

adhesion. See Deutsche Lufthansa Aktiengesellschaft v.

C. A. B., 156 U.S.App.D.C. 191, 479 F.2d 912 (1973) ;

Lisi v. Alitalia-Linee Aeree Italiane, S.p.A., 253 F.Supp.

237 (S.D.N.Y.1966), aff'd 370 F.2d 508 (2d Cir. 1966),

aff'd by an equally divided court, 390 U.S. 455, 88 S.Ct.

281, 19 L.Ed.2d 276 (1968); Mertens v. Flying Tiger

Line, Inc., 341 F.2d 851 (2d Cir. 1965); and Warren v.

Flying Tiger Line, Inc., 352 F.2d 494 (9th Cir. 1965).

Air carriers treat the tickets as contracts between them

and the passengers.’* It is interesting to note that the

defendant in its pleadings and moving papers has as-

_serted that the decedents were traveling under “a con-

13 See, e.g., the passenger ticket attached as exhibit A to de-

fendant’s motion for partial summary judgment on September 5,

1978. The ticket, typical of airline carriage documents, lists “Con-

ditions of Contract”, and the first such paragraph states “As used

in this contract... .”

52a

tractual ticket” or a “ticket contract,” * and in the pre-

trial conference order, the defendant explicitly adopted as

its position that the Warsaw Convention and its progeny

were applicable through the conditions of contract in the

tickets of the plaintiffs’ decedents. In its contentions in

the pre-trial conference, the defendants argued that the

decedents “. . . boarded PAN AMERICAN Flight 812

pursuant to a ticket duly issued which contained a Notice

to each passenger on the possible applicability of the

Warsaw Convention, Hague Protocol, and/or Montreal

Agreement.” *®

The pre-trial conference order framed the issues before

this court, under Rule 9, Rules of the United States

District Court for the Central District of California.

Ross v. Pan American Airways, Inc., 299 N.Y. 88, 85

N.E.2d 880 (1949), cert denied sub. nom. Froman v. Pan

American Airways, Inc., 349 U.S. 947, 75 S.Ct. 874, 99

L.Ed. 1273 (1955) is not contrary; in addition, its au-

thority has been severely diminished by subsequent cases.

In Ross, plaintiff in a personal injuries action argued that

the Warsaw Convention’s liability limitation did not apply

because her ticket had been obtained for her by a third

party, and therefore there was no “delivery” within the

meaning of Article 3, which is necessary if the liability

limitation is to apply. The majority of the court rejected

this contention. Despite the fact that the plaintiff never

had an opportunity to examine the ticket prior to her de-

14 See, e.g., Answer of Defendant to First Amended Complaint,

Simone Ryder v. Pan American World Airways, CV 75-3293, at

{7 (“contractual ticket”); Opposition of Pan American World

Airways, et al., to the Plaintiffs’ Discovery Committee’s Motion to

Strike the Affirmative Defenses of the Warsaw Convention, etc.,

In Re Aircrash at Bali, MDL No. 215 (All Cases), at p. 14, where

the liability limitation was discussed under the heading “con-

tractual limitation,” and the limitation argued pursuant to “the

ticket contract.” -

15 Pre-Trial Conference Order, pp. 28-29, at {/{[ a, b, and c.

53a

parture, the court found summary judgment appropriate

for the defendant, on the grounds that plaintiff had im-

plicity or explicitly ratified the third party’s ticketing for

her. The dissent argued unsuccessfully that the language

of the convention’s Articles 1 and 3 required that plaintiff

be given the opportunity to show that she had undertaken

no contractual relationship with the air carrier. The

logic of the dissenter’s position is that the convention’s

liability limitation is based upon a contractual relation-

ship between the injured party and the carrier, rather

than an invocation of the phrases supremacy clause and

international transportation. This logic is persuasive. In

any event, this court is interpreting a document which is

allegedly a federal treaty, and is not bound by state

court interpretations. Noel v. Linea Aeropostal Venezol-

ana, 247 F.2d 677, 679 (2d Cir. 1957).

In federal law, Grey v. American Airlines, 95 F.Supp.

756 (S.D.N.Y.1950) followed the Ross decision’s liberal

application of the Warsaw Convention. The Grey case was

decided the year following the Ross ruling, in a federal

district court sitting in the Ross court’s state. Subse-

quent decisions, both federal and New York state, have

both diminished the authority of the Ross and Grey cases

and read them narrowly. In Lisi v. Alitalia-Linee Aeree

Italiane, 253 F.Supp. 237 (S.D.N.Y.1966), the court

limited Grey to stand for the proposition only that a ticket

need not necessarily list all “agreed stopping places” as

required by the treaty for the Warsaw Convention liability

limitation to apply. Jd. at n.6. The Lisi court held that

the liability limitation must be so included, if it is to have

effect. Id. at 239. The court found a difference in the

treatment accorded the two provisions appropriate, given

the relative importance of the two. Id. at n.6. The lia-

bility limitation was a major provision, the stoppixg

places listing a minor one. See id. On appeal, the court

affirmed both the lower court’s decision and its reading

of Grey, see 370 F.2d at 508, n. 8. In Mertens v. Flying

Tiger Line, 341 F.2d 851 (2d Cir. 1965), the court re-

54a

versed the trial court, which had found the liability limita-

tion applicable. The Court of Appeals found the carrier’s

delivery of the ticket to the passenger was not adequate.

This result was directly contrary to the result in Ross.

The Mertens court construed the Ross case very narrowly,

reading it to say only that “the limitation on liability

does not depend ‘for its existence and validity on express

assent thereto by the passenger.’” Jd. at 857. The Mer-

tens opinion was adopted by the Ninth Circuit in Warren

v. Flying Tiger Line, 352 F.2d 494 (1965). The highest

state court in New York has adopted a contract-like ap-

proach to the Warsaw Convention and has questioned the

continued strength of the Ross decision, see Egan v. Kolls-

man Instrument Corp., 21 N.Y.2d 160, 287 N.Y.S.2d 14,

especially 20, 234 N.E.2d 199 (Ct.App.1968). Grey has

been limited to the allowable exclusion of minor terms

only from the contract, while Ross stands only for the

proposition that the express assent of the party to be

bound by the limitation need not be given. In the case at

bar, there is no assent to be bound by the plaintiffs, nor

could the plaintiffs’ decedents have contractually limited

the plaintiffs’ causes of action, given the clearly recog-

nized nature of the California wrongful death cause of

action.

The recent trend, particularly the ticket notice cases,

including Warren. v. Flying Tiger Line, demonstrates the

courts’ willingness to review the interpretation of War-

saw '* and the courts’ protection of injured parties from

Warsaw’s liability limitations, in part through contractual

and contract-like principles. Since there is no privity

between the air carrier and the plaintiffs this court holds

the Warsaw Convention’s liability limitation does not

apply in the present case.

16 See, e.g., Benjamins v. British European Airways, 572 F.2d

913 (2d Cir. 1978), in which Judge Lumbard reversed his own

long standing opinions that the Warsaw Convention does not create

a wrongful death action.

55a

3. The Montreal Agreement:

The Montreal Agreement and the events surrounding

it establish that this court’s interpretation of the liability

limitation is the correct one. The Montreal Agreement

as such is an agreement among the air carriers, drafted

with the participation of the Department of State, the

CAB and the private International Air Transport Asso-

ciation. In the Agreement,” the carriers agree that each

will include certain provisions in its contracts of car-

riage, specifically, 1) a liability limitation of $75,000, or

$58,000 where a jurisdiction makes a separate award of

litigation costs, and, 2) a notice to passengers advising

them of the liability limitation. This agreement was ap-

proved by the Civil Aeronautics Board in an order dated

May 13, 1966.'* Article 2 of the Agreement refers to the

resulting conditions of carriage as a special contract, and

the CAB order approving the Agreement confirms that it

establishes a special contract, “in accordance with Article

22(1) of the Convention.” **° The order further notes that

passengers governed by this “special contract” mandated

by the Agreement are entitled to the notice provided in

the Agreement. Pursuant to the Montreal Agreement and

the CAB order, all international air travel which, in the

words of the CAB opinion, “includes a point in the United

States as a point of origin, point of destination, or agreed

stopping place” is subject to a special contract. Under

this special contract liability is limited.

By their terms the Montreal Agreement and the CAB

order make the liability limitation contractual in nature.

This has been recognized by a noted commentator and

has been adopted by a federai court. One author has

17 Generally known as Agreement CAB 18,900.

18 Order No. E-23680, Vol. 31, No. 97, Fed.Reg. 7302 (May 19,

1966).

19 Note that under Article 22(1) special contracts are between

“the carrier and the passenger.”

56a

noted that the Montreal system “. . . impose(s) upon in-

ternational aviation involving the United States a quasi-

legal and largely experimental system of liability that

is essentially contractual in nature.” L. Kreindler, 1

Aviation Accident Law, Ch. 12, §12A.02 at 3 (1975).

In Husserl v. Swiss Air Transport Co., Ltd., 351 F.Supp.

702 at 704 n. 1 (S.D.N.Y.1972), the court quoted Kreind-

ler on this point with approval, and by its observation

elsewhere in its opinion demonstrated that it viewed

Warsaw liability as contractually based, both before and

after the Montreal Agreement. The court stated, “Yet

it is difficult to question the modification effectuated by

the Montreal Agreement of the contractual relationship

between the parties within the Warsaw Convention sys-

tem of liability.” Id. at 707.

On two grounds, the Montreal Agreement, the CAB

order and the circumstances surrounding their adoption

establish that the air carriers’ limitation of liability is

contractually based. First, they are an authoritative

rule for this court to follow as to the meaning of the

original Warsaw Convention’s limitation of liability. The

United States, by its acceptance of the Montreal Agree-

ment in lieu of denunciation of the Warsaw Convention,

has clearly interpreted the limitation of liability as one

based on contract. Were the liability limitation not con-

tractual in nature, then the United States could not ac-

cept a scheme clearly contractual to modify the limita-

tion. Second, they supercede the Warsaw Convention in

their provision of a basis to limit liability. The United

States executive branch explicitly conditioned the with-

drawal of its denunciation of the Warsaw Convention

on the new liability limitation scheme. See CAB Order

Number E-23680, 31 Fed.Reg. 7302 (May 19, 1966);

CAB Press Release 66-61, 382-6031 (May 138, 1966);

Department of State Press Release No. 110 (May 13,

1966). The low liability regime of the earlier Convention

was rendered moot. Jd. This court must give substan-

tial weight to the construction given by the executive

Bev hada rac ee Baas nad te id . hah aa anh

ame a De

See

57a

branch to a treaty, although it must not abdicate its

judicial responsibility. Kolovrat v. Oregon, 366 U.S.

187, 194, 81 S.Ct. 922, 6 L.Ed.2d 218, 223 (1961).

Under the circumstances, in which the United States de-

nounced the Warsaw Convention, and then withdrew its

denunciation in the light of the Montreal Agreement, this

court may analogize the Warsaw Convention to a statute

reenacted after a definite interpretation has been given

to a particular provision by an authoritative voice. In

such a case, the intervening interpretation is deemed to

be the correct one. E.g., Cammarano v. U.S., 358 U.S.

498 at 510, 79 S.Ct. 524 at 531, 3 L.kd.2d 462 at 470

(1958); Helvering v. R. J. Reynolds Tobacco Co., 306

U.S. 110 at 115, 59 S.Ct. 423, 83 L.Ed. 536 at 540

(1939) ; Morrissey v. Commissioner of Internal Revenue,

103 F.2d 234 at 235 (9th Cir. 1939). In this case, the

executive branch by its adoption of the Montreal Agree-

ment and its withdrawal of the Warsaw Convention de-

nunciation requires that this court read into the Warsaw

Convention the interpretation given by the Montreal

Agreement. This interpretation, it has been shown, gives

a contractual basis to the liability limitation.

Moreover, the liability limitation established by the

Montreal Agreement is given the force of law through a

tariff approved by the CAB in its opinion of May 13,

1966. It is hornbook law that an ambiguity in a tariff

prepared by the carrier is construed against the carrier.

E.g., Chicago & N.W. Ry. Co. v. Hunt-Wesson Foods,

Inc., 504 F.2d 905 at 908 (7th Cir. 1974), Penn Cent.

Co. v. General Mills, Inc., 489 F.2d 1838 at 1341 (8th

Cir. 1971). Construing the tariff embodied in the Mont-

real Agreement, this court holds that air carriers were

given the right to limit their liability to $75,000, only if

a special contract exists between a carrier and the in-

jured party. The Warsaw Convention’s liability limita-

tion is no longer viable. The remaining utility of the

Convention remains not in the area of the liability limi-

58a

tation, but as a general international expression of the

need for uniform air laws, see Department of State Press

Release No. 110, May 138, 1966. In the specific area of

the liability limitation, the United States by its denuncia-

tion, approval of the Montreal Agreement, and with-

drawal of its denunciation, has demonstrated that a right

to a high damage recovery is more important to the

United States than conformity on this point. The argu-

ment made by the court in Reed v. Wiser, 555 F.2d 1079

(2d Cir. 1977), that great weight should be given to the

need to have a uniform body of worldwide liability rules,

is therefore not apposite here, where the United States

has explicitly made its continued adherence to the War-

saw Convention contingent upon a non-uniform higher

recovery rule for United States passengers.

As has been demonstrated in parts 1 and 2 of this

section of the opinion, the basis of the Warsaw Conven-

tion’s liability limitation is contractual. It is clear that

whatever argument to the contrary could be made be-

fore, the Montreal Agreement and its adoption conclu-

sively confirm that the liability limitation is founded in

contract. This ‘court is compelled to give meaning to the

conception established by the Montreal Agreement that

the liability lirfitation is based upon a special contract.

Since the plaintiffs were not parties to any special con-

tract limiting liability, their recoveries cannot be so

limited.

4. Federal Public Policy:

To the degree that the Warsaw Convention has effect

in this court, it has so as a federal treaty. In deciding

its interpretation, this court must censider what result

is demanded by federal public policy. It is clear that the

present public policy of the United States is to view air

carriers as viable entities no longer dependent upon gov-

ernment protection through an “infant industries” argu-

ment.

59a

One must take into perspective the time factor in a

consideration of the wisdom of this country subscribing

to the Warsaw Convention in 1934. The aircraft indus-

try was in its infancy, relatively minor in importance

in the total public transportation picture and technologi-

cally in its formative years. For example, in the five-

year period commencing 1925, the total airlines operation

encompassed only 400 million passenger miles with a

fat

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